Deadbeat Government

Funny, funny things are starting to happen in this country. The latest is that The Government and Banks are beginning to give (& take) IOU's from each other.

Citi, Bank of the West to keep taking IOUs

Citibank and Bank of the West will continue accepting California IOUs, State Treasurer Bill Lockyer’s office said late Friday. Citi (NYSE: C) agreed to accept the notes for another week -- to July 17.

Bank of the West, which initially told the Treasurer’s office that it would no longer accept the notes, changed its mind and will now do so “indefinitely,” according to the Treasurer’s office, which had urged all the state’s major banks to continue taking the IOUs.

More than 60 credit unions will accept the IOUs, according to the California League of Credit Unions. Some community banks said they’ll also accept the notes from existing customers.

Major banks which rejected Lockyer’s request include Bank of America, (NYSE: BAC) Wells Fargo, (NYSE: WFC) J.P. Morgan Chase, (NYSE: JPM) and Union Bank. Lockyer’s office said U.S. Bank (NYSE: USB) did not provide a “definite answer” on whether it will continue accepting the IOUs.

Most major banks in California had originally said they would accept California IOUs only through July 10. “Citi made a difficult but responsible decision, both from a customer and taxpayer perspective,” Lockyer said. “As for the other banks, their refusal to continue accepting IOUs is disappointing. I understand their position, but I don’t agree with it. “I continue to believe they would better serve their customers and the taxpayers of California if they continued to accept the IOUs,” Lockyer said.

“Hopefully, they will have a change of heart.”

I don't exactly know what to make of a situation where Government & Banks begin to exchange IOU's.

And these aren't traditional government "IOU's" (ie bonds), with a legally binding agreement to pay back the amounts, collateralized by some thing. No, these are just straight unsecured IOU's, like you'd get from your deadbeat brother.

I assumed that Government would only accept IOU's, NOT issue them. Strange Day's, folks, strange fucking day's.

I just wonder what's next? Because issuing IOU's starts to blur the line of just what "debt" is, and how trustworthy our governments promises are. The whole edifice is starting to blur... who is dependable, who needs money, who will go out of business?

Seems Cali would have issued bonds or something before this happened. That they didn't seems to indicate they couldn't.

And you can tell from the article that accepting them is a dicey business. Banks are in a precarious position themselves. They are supposed to owe Real Money to the US Government.

This gels with my thesis of Keep Your Money, and segue's into the local hilarity surrounding the failed establishment of Crown Point Bank.

Folks, Keep Your Money! When a snake oil salesman comes and tells you that they have the latest & greatest perpetual motion machine, for the love of God, don't buy it!

Here is Gerlicher & Costa's initial attempt to fleece the masses:

A new player in local finance?
Investors plan to start nationally chartered bank in Bend

Pending regulatory approval, Bend could soon be home to a new nationally chartered bank.

A group of investors led by Sisters resident Elijah Aldinger has proposed creating a full-service commercial bank that would be headquartered in downtown Bend with a branch in Portland.

The proposed bank, which would be called Crown Point National Bank, would specialize in servicing the banking needs of small businesses, said the bank’s president and CEO, Andrew Gerlicher.

“This is a great place to open a bank,” Gerlicher said. “People are discovering Bend, have been and continue to, and the opportunities are real and, we think, dependable.”

Gerlicher said the bank has 43 founders who have pooled more than $4 million to fund the bank’s organization, and that additional capital would likely come from a public stock offering sometime after the bank gains regulatory approval.

Gerlicher estimates the bank will open by the first quarter of 2009. Despite the current economic climate, Gerlicher said, it’s a great time to open a bank.

While many banks have slashed their lending in the wake of the housing and credit fallout, falling real estate prices have created demand for loans, which presents opportunities for banks with clean balance sheets, he said.

Gerlicher said the bank is not being created to take advantage of the current situation but because it believes in the long-term potential of the Bend and Portland markets. “The things we’re hearing in the news are temporary things ... cycles tend to work their way through issues, so you really want to look beyond that and not hang the whole prospectus of the enterprise on a point of time,” Gerlicher said.

“It’s the overall demographic changes, the continued growth and the people moving in, and, really, in Oregon in general. The same trends can be seen in the Portland market, so this is a long-term business that has a long-term view.”

The bank has applied for a national charter with the federal Office of the Comptroller of the Currency, which requires the applicant to include the word “national” in its name or the abbreviated suffix “N.A.,” which stands for “national association.”

Banks without a federal charter are chartered by states. Gerlicher, an attorney with 25 years of experience working for Umpqua Bank, West Coast Trust Co. and First Interstate Bank, said the bank chose a national charter partly due to his and other Crown Point executives’ experience in dealing with federal regulatory agencies.

Gerlicher said the differences between federally chartered and state-chartered banks are small. The bank’s headquarters will be in the former Washington Mutual Home Loan Center in downtown Bend, at 956 N.W. Bond St. Washington Mutual closed its home loan centers across the country in March, according to Darcy Donahoe-Wilmot, vice president of national public relations, Northwest bureau, for Washington Mutual.

Renovations on the bank’s future home, at the corner of Bond Street and Oregon Avenue, are under way.

Gerlicher said dedication to customer service and a community bank mentality will attract customers in a crowded field of banks downtown.

“Local businesses, I’ve found, prefer to work with people who they can get in touch with in person and who can give them the immediate, intelligent response to their requests,” Gerlicher said.

“We’re going to hire experienced and seasoned bankers, and help these businesses get that level of personal service, to be able to talk to someone on the other end of the line.”

Though it plans to specialize in small-business banking, Crown Point also will offer home and personal loans, and checking and savings accounts, and its deposits will be secured by the Federal Deposit Insurance Corp., Gerlicher said.

The bank expects to finalize a Portland location in coming months. Should it be approved, Crown Point will join the Bank of the Cascades, founded in 1977, and High Desert Bank, founded in 2007, as the only banks with headquarters in Bend.

Linda Navarro, president and CEO of the Oregon Bankers Association, isn’t surprised a new bank is opening in Bend. The region’s demographics make the area attractive, and speak to the fact that there’s a strong future for community banking in Bend and elsewhere, she said.

“Banks continue to provide viable services to their communities ... and even with consolidation in the banking industry, new banks continue to organize because there is a place for community banks, especially in local communities where management and employees are centralized in the community,” Navarro said.

“They truly embody the definition of serving and growing a community.”

Sorry, but the parrellels to earlier hucksters is just amazing.

“Local businesses, I’ve found, prefer to work with people who they can get in touch with in person and who can give them the immediate, intelligent response to their requests,” Gerlicher said. “We’re going to hire experienced and seasoned bankers, and help these businesses get that level of personal service, to be able to talk to someone on the other end of the line.”

OK boys and girls, it's time for NAME THAT HUCKSTER!

What huckster said this?

"They want to live in a custom home," _________ said. "And they don't want to sacrifice quality. They want to be close to walking trails and the mountains. They're really mobile and they have a lot of money," _______ said.

If you guessed BECKY BREEZE, You Win!!!! Who could forget the salad days when articles with titles like Condo-mania appeared in the Bulletin with such regularity, that we didn't even think how preposterous they really were.

And if you just rolled in off the turnip truck, you should know that the "custom home" Breeze is speaking of was her very own Plaza condominiums, a disaster that went down to foreclosure.

OK, on to our next Huckster!!!! Who said the following?

In Franklin Crossing at the corner of Franklin and Bond — the downtown’s first new five-story mixed-use building — buyers lined up to snap up reservations on the buildings eight top-floor condominium units last spring, despite prices that ranged over $1 million, ___________ said.

If you guessed NORMA DUBOIS, you win!!! Ding, ding, ding, ding, ding, ding!!!!

Turnip truckster will be happy to know that Franklin Crossing NEVER "Sold Out" and still has cobwebbed units galore available to this day.

OK, our next Huckster is up! It's a toughie, so I'll try to give you more material...

"They told me, start conservatively," he recalled. "I just really didn't want to go there. I wanted to break down the barriers and go with the philosophy of if I build it right, they will come."

"The day we opened the doors, it had the buzz we were looking for," _______ said. "It could have been in Portland or San Francisco."

"Everything is going according to plan," _________ said, "and it feels good."

If you guess JODY DENTON, you WIN!!!!! Ding, ding, ding, ding, ding, ding... well, OK, you get it.

Turnipers, it should be obvious that Bend is all about PR & MARKETING PONZI SCHEME'S TO YOU, dumbfucks who just fell off the meat wagon.

That's ALL that happens here.

It's why this blog is periodically "written off" in the comments. The grifting crowd really, REALLY hates this motherfucker.

MOST of the failures of Bend are not even acknolwedged. Only the really zingers that are too big to coverup, such as Cessna's Complete Failure with Columbia Air, and others. Most of the small stuff simply closes, and goes out with a whimper.

Who are the Failures of Tomorrow?

Well, it is typically people who start a modest enterprise, in the same spot as something similar that has recently failed. Usually easy to spot because of lines in the Bully like this:

Bend and Redmond to get new restaurants

Longtime Central Oregon restaurateur Axel Hoch and business partner Mark Perry are planning to open a new steakhouse in Bend’s Mill Quarter district. The restaurant, to be called the River Mill Grill, will be in Fireside red’s old location, at 803 S.W. Industrial Way, Suite 202, in Bend. Fireside red closed in May.

So why do these people think they will succeed where others have failed miserably?
Why it's The Doctrine of Bend Exceptionalism, of course. That feeling that makes you want to piss away your life's work because your a Narcissistic Fop who thinks they will always succeed where other mere mortals have crashed & burned.

BUT, you have to appeal to THE NORMALS, and not come off like an asshole, so the Ace In The Hole always comes out:

Hoch, who previously opened Le Bistro, the Old Bend Blacksmith Shop and Barney Prine’s Steakhouse & Saloon, said the location — with its expansive deck and view of the river, The Old Mill District and Les Schwab Amphitheater — was too good to pass up.

Ahhh yes. The Olde Location That Is Too Good To Pass Up. Who has recently succumbed to this load Of Shit?

Let's play Guess That Dupe!!!!
“It is exactly the same food, same menu and the same staff — it’s just a new location,” said ____________, co-owner of __________. “We are excited to be a part of downtown.”

If you guess "Cheri Helt" and "Zydeco", then you win!

But then again, it could be 900 Wall, or a host of other Bend businesses that have frisked the owners CLEAN of all their Worldly possessions. No one says it better than Hot Young Margie:

Marge said...

The Shire shit, was a good one. Bottom? Not for 3-5 years. Their holding time. More Cali-suckers. I say, fleece em and eat em.

All these NOOBS jumping in, just because prices have fallen UNHEARD OF amounts. And their newest, best-est idea is some sort of VALUE-PRICED MENU.

Cessna? Value Priced Menu.
Zydeco? Value Priced Menu.
Crown Point Bank? Value Priced Menu.
The Shire? Value Priced Menu.
Tuscany BUTTPLUGS? Value Priced Menu.
River Mill Grill? Well, let's see:

“It’s a great location, great parking and good timing,” said Hoch, adding that the menu will be “value-oriented.”

Yup, same shit, different day. Everyone buys the infinite river of bullshit sluiced down their gullet by The Eternally Optimistic Bend Media Machine.

Not a single NEW IDEA in sight. Always the same BULLSHIT recycled in exactly the same spot, with exactly the same reason for WILD & ETERNAL SUCCESS: Value Priced Menu.

Same shit, just a little cheaper.

This is exactly the sort of thinking that will keep Bend in an eternal malaise.

Bend has exactly 3 BUSINESS PLANS:

1. Subdiv (or Bank or Restaurant or...) with New Value Priced Menu
2. Ski Hill
3. Perpetual Motion Machine (aka Garbage-Fueled Buttplugs)

These are the only things that have even been tried here for 100 years.

Bend's recent success is more indicative of a country that is DYING than anything. What do you do when you don't have a lot of time left?

Well, you gather up what you DO have, and go off and spend it in an orgy of hookers & blow, and basically come out the other side ready to die.

Bend is a community that revolves around HOOKERS & BLOW. Ski hills to find the hookers, homes to snort the blow, and buttplugs when your fucking mind is gone.

Bend is a side-effect of a country in decline. The last gasp of hedonists who implant pump-up cocks & fake titties, and squirt their love juice over anything that moves. Ask Bledsoe: he built the Magnificent Pleasure Palace Xanadu where he swallers donkey cum by the bucket & you can always stuff a 14" inflatable cock-balloon in your best friends wifes ass.

This is Bend.

"Where's the blow, Big Boy?"

hbm, do you have a dog that'll Fill me Up?

OK, this chick is just hot.

Bend's Newest Business Plan: Flip & Strip.

OK, just when I think Costa has woke up & smelled the homeless, he puts out something like this:

Where all the jobs have gone

By Jeff McDonald / The Bulletin
Published: June 28. 2009 4:00AM PST

The meteoric rise and fall of Deschutes County’s unemployment rate has garnered national headlines as a prototypical boom and bust story, but what lies behind the county’s unemployment rate increase of 12 percentage points from May 2007 to May 2009?

Where have all the jobs gone? And how will the region look when it recovers?

Many companies reported difficulties finding employees in May 2007, when Deschutes County’s seasonally adjusted unemployment rate was 4.7 percent.

Now, with an unemployment rate of 16.7 percent reported last week in the county and rates of 16.4 percent in Jefferson County and 20.9 percent in Crook County, employers report an abundance of labor with companies slashing wages and jobs, unemployment rates at all-time highs and job-seekers going to great lengths to find work.

Experts who study the region’s labor trends agree that the region’s housing market and construction activity became overheated during the boom years between 2004 and 2006.

“I don’t know what we’re shifting to, but when you look at that loss in (mining, logging and construction) jobs in just the last two years, it is safe to say the development-based economy has slowed,” said Carolyn Eagan, the region’s economist for the Oregon Employment Department.

“The county and city of Bend (have) had to cut staff, engineering firms are operating on bare-bones staff and many Realtors are not renewing their licenses,” Eagan said. “I don’t know what we’re shifting to. I don’t think we’ll know until it’s happened.”

The collapse of the housing industry has resulted in a net loss of 3,050 jobs in the county’s mining, logging and construction sector from May 2007 to May 2009, a 36.2 percent drop, according to the Oregon Employment Department. Most of that sector is construction, according to the department.

The county has 4,860 fewer jobs overall than it did in May 2007, the department said.

Other sectors where job losses were reported included manufacturing; professional and business services; and trade, transportation and utilities. They lost 910 jobs, 530 jobs and 710 jobs over the two-year period, respectively.

Individual industries such as high-tech and biosciences, which are smaller in size, are grouped under larger sectors such as manufacturing or professional services, depending on whether they produce a product or conduct research or provide services, for example, according to the Employment Department.

Professional and business services jobs range from those in law offices and architectural firms to employment and janitorial services. The trade, transportation and utilities sector includes retail and wholesale businesses, as well as private utility companies and private transportation companies.

Educational and health services jobs were up by 400, and leisure and hospitality jobs by 240, from May 2007 to May 2009, according to the data.

Those sectors demonstrated growth, but at a milder pace than during the boom years, the department said.

Over the same two-year period, there were 360 government jobs added in Deschutes County.

In May 2007, there were 67,120 jobs, 8.7 percent more than May 2009, according to a report last week from the Employment Department. The county peaked in total employment with 73,510 jobs in June 2007.

Job losses alone do not explain the state and county’s record-high unemployment totals, Eagan said.

The civilian labor force — which includes anyone 16 and older who either has a job or is looking for work — has been growing in the county and statewide despite fewer jobs available, according to the Employment Department.

More people are postponing retirement and staying in the work force, and second-wage income earners such as spouses who previously didn’t work and retirees are re-entering the work force. Additionally, more people are continuing their job search longer than they would normally without finding work, Eagan said.

Unemployment trends

Oregon’s 12.4 percent unemployment rate is the second-highest in the nation, behind only Michigan, which had a 14.1 percent seasonally adjusted unemployment rate in May, according to a U.S. Department of Labor report issued June 19.

The Midwestern state, which has been decimated by the loss of auto industry-related jobs, has seen its civilian labor force shrink from 4.97 million in April 2007 to 4.78 million in April 2008, according to the state’s labor Web site.

Meanwhile, Oregon’s civilian labor force grew from 1.91 million to nearly 2 million over the same time period, according to the state’s employment Web site.

The collapse of the housing market — one part of the asset bubble that also included stocks, retirement savings and other investments — also contributed to the rise in the civilian labor force in Oregon and other Western states, said Timothy Duy, adjunct professor of economics at the University of Oregon.

People who were living off their assets, particularly in a resort community like Central Oregon, were forced to go back to work when they saw their houses and other investments lose value last year, said Duy, who follows the region closely and authors the quarterly Central Oregon Business Index.

“As assets became increasingly impaired and foreclosures started rising, the labor force started (increasing) quickly,” Duy said. “That started a process where the unemployment rate started spiking.”

Mounting job losses also contributed to the rising unemployment rate, which spiked nearly 10 percentage points over the past 12 months — from 7 percent to 16.7 percent, Duy said. Both trends, an increasing number of people who had lost equity in their homes and money in investments, and an increasing number of people who lost their jobs, increased the rate of unemployment, he said.

The county is on track this year — with 1,661 notices of default through Wednesday — to easily surpass the record 1,928 notices of default filed in 2008, but notices appear to have peaked in April. A notice of default is the first step in the foreclosure process but doesn’t always result in bank repossession.

While the unemployment rate could still go higher in coming months, the high unemployment numbers are more of a lagging indicator for the region, a fallout from the overheated housing economy, said Roger Lee, executive director of Economic Development for Central Oregon, which promotes development in the region.

“It cannot be overstated that while it is definitely a painful process, there is a purpose to the business cycle,” he said. “We’d like to have it a lot less deep and prolonged, but we’re seeing people get lean and mean.”

Hardest hit

Construction and manufacturing have been hard hit throughout the region, accounting for roughly half the region’s unemployed workers, but several industries, while battered, are still holding their own, Lee said.

Lane Lehrke, 42, who moved to Bend in 2003 with his wife and two children, bought a home and worked for a local builder as a production manager until October, when he was laid off due to lack of work. He had owned his own company in Oregon City before he joined the Bend builder.

But Lehrke has not been able to find work in the construction field, despite sending out résumés to five different Western states and online sites, he said.

“I have put in résumés in lots of places,” Lehrke said. “I have gotten a lot of nonresponses. Very rarely do I get a response.”

Lehrke, while collecting unemployment, still makes $400 monthly payments to pay for the cost of his builder’s license, insurance and bonding, he said.

“I’ve got some opportunities in the fall,” he said, referring to potential jobs in Portland. “A lot of it has to do with stimulus funding.”

What comes out of the current trough in the business cycle will depend upon how much the county diversifies its employment base, said Lee.

Construction was 11.7 percent of the total work force in May 2007, and is 8 percent today, according to the Employment Department. Manufacturing, meanwhile, was 7.7 percent of the work force in May 2007, and is 6.9 percent today.

“This place is not tanking,” Lee said. “There are indicators of economic activity still going on here.”

The economy needs more diversity, but is not on a tipping point like it was in the 1980s, Lee said.

That was when the region’s mills were crippled by changing forest policies and the area began to rebuild its economy, he said.

“There are a lot of examples in the West where the change in forest policy decimated those areas,” he said. “Central Oregon has done a decent job, but we still need to do better in targeting industries that have promise.”

The region needs to target companies in knowledge-based industries such as renewable energy, software and medical device manufacturing, he said. Global competition is fierce in recruiting “green” companies, which provide top wages and heavy capital investment, Lee said.

Central Oregon has been competitive in its recruiting efforts for those types of companies, Lee said, citing more affordable land in the region, a ready work force and quality of life. Lee expects to find companies that are the right size for the region, possibly landing suppliers for Portland’s growing green manufacturing base.

Companies such as Bend-based dog apparel manufacturer Ruff Wear and Warm Springs Composite Products, which both ship products overseas, are faring well. Others that have been hit hard by the national recession, such as Madras-based manufacturer Bright Wood and Contact Industries in Prineville, are retooling and will eventually provide jobs in Jefferson and Crook counties, Lee said.

“With very few exceptions, these are very sophisticated wood products manufacturing companies,” Lee said. “They will be back with those kinds of jobs. Our challenge is to diversify with other types of jobs.”

OK, without looking, was the title:

WHERE HAVE ALL THE JOBS GONE

or

WHERE ALL THE JOBS HAVE GONE

Right. The first one implies jobs that are gone. The second implies that the jobs are "still there", they are just hanging out somewhere smoking cigg's or something.

Very sleezy writing, and something I guarantee Costa jumped in to change. Sooooo... the first is a more appropriate title, but of course it is the second that was actually used. You can tell, because the writer uses the obviously "correct" title in his second paragraph:

You find, of course, there is no answer to either.

WHERE ALL THE JOBS HAVE GONE.

So it is a STATEMENT, not a question. And it appears that the answer is NOWHERE. They're just gone. They aren't hiding somewhere, waiting to be found.

You gotta love these softball pieces, where the reader is treated like they are 5 yrs old.

Where have all the jobs gone? And how will the region look when it recovers?

Here's the real answer: Most of that employment near the peak was FAUX JOBS & FAKE BUSINESSES, 100% fake and unneeded and unsustainable jobs, businesses that never had a chance.

Building houses no one wanted. Mortgage brokers hired, apprasiers for falsified appraisals. And all the "multiplier" jobs: All the jobs & businesses that were spawned from a credit-fabricated bubble, to feed demand that had no basis in reality.

Those jobs are gone. And the "multiplier" jobs; the coffee shack purchases, the Jamba Juices, the oil changes and all the other stuff that "fuels" those faux jobs will soon be gone too.

Remember the local business index that the Bully used to print? Well, one of the most out-of-control pieces of that index was the Help Wanted ad count.

Over the course of just a few years, it went from 1-2,000 to something like 12,000!

THAT was the bubble. Well, at least it showed the jobs bubble that happened here. We should have known FULL WELL something was wrong when we saw that stat.

But we didn't despite have sharp as nails local experts making the following observations:

Experts who study the region’s labor trends agree that the region’s housing market and construction activity became overheated during the boom years between 2004 and 2006.

Wow.

Do you think so, Costa?

Funny. In this sentence, it starts out regarding experts studying the "region's labor trends", and ends up with a conclusion about our "overheated" construction market.

Standard bamboozling bullshit.

And what's great is although we are promised some sort of insight into what the area will morph into, the piece never delivers:

“I don’t know what we’re shifting to, but when you look at that loss in (mining, logging and construction) jobs in just the last two years, it is safe to say the development-based economy has slowed,” said Carolyn Eagan, the region’s economist for the Oregon Employment Department.

“I don’t know what we’re shifting to. I don’t think we’ll know until it’s happened.”

Is this one of the "EXPERTS", Costa? Seriously.

She is really going out on a ledge here, with such forward-looking statements as:

...it is safe to say the development-based economy has slowed

Dang. I guess maye she looked over at the sidebar and saw the following stat:

Mining, logging and construction 8,420 to 5,370 (jobs) — Down 36.2%

Nice touch. The strangely globbed together industries of mining, logging and construction has LOST ONE THIRD of it's job base, and THE EXPERT has made the observation that THE DEVELOPMENT BASED PORTION OF OUR ECONOMY HAS SLOWED.

Never "shrunk". Not "lost". No, no. Slowed.

Q: "Dude, are you feeling better after that motorcycle accident where you lost your fucking arms and legs?"

A: "Fuck dude, I didn't LOSE anything! They were just slowed!"

Q: "Dude, did you also become retarded?"

So, needless to say there is a ton of Costa-fueled double-talk in this piece. But there are also outright contradictions of earlier "assertions":

The collapse of the housing market — one part of the asset bubble that also included stocks, retirement savings and other investments — also contributed to the rise in the civilian labor force in Oregon and other Western states, said Timothy Duy, adjunct professor of economics at the University of Oregon.

People who were living off their assets, particularly in a resort community like Central Oregon, were forced to go back to work when they saw their houses and other investments lose value last year, said Duy, who follows the region closely and authors the quarterly Central Oregon Business Index.

Remember, way back when, we were told repeatedly that BECAUSE Cent OR had such a huge Asset-Rich retirement base, that we were essentially IMMUNE to unemployment anymore?

Uh huh. All those IDLE MILLIONAIRES just stuffing westside houses, didn't need to work, or do anything but cycle all day, and get their cocks sucked all night by their best friends wife, while Bledsoe swallowed donkey cum buckets.

Welp, all of a sudden those motha fuckas need money, and are starting to take jobs at McDonalds.

These are the WAKE UP AND SMELL REALITY Cali-banger dumbfucks who thought they'd come here and never work another fucking second in their lives... dead ass broke.

THAT is who is UNEMPLOYED, that is what's come outta the fucking woodwork. Costa told us we'd all ride a magic carpet of affluence FOREVER cuz these motherfuckers would never stop CUMMING here, and showering us with BILLIONS.

Yeah, these fuckers are BROKE.

Finally, we get Roger Lee's take, who basically says it was over months ago, and it's great that it happened:

While the unemployment rate could still go higher in coming months, the high unemployment numbers are more of a lagging indicator for the region, a fallout from the overheated housing economy, said Roger Lee, executive director of Economic Development for Central Oregon, which promotes development in the region.

“It cannot be overstated that while it is definitely a painful process, there is a purpose to the business cycle,” he said. “We’d like to have it a lot less deep and prolonged, but we’re seeing people get lean and mean.”

It's all good with Lee. His mother could get her head cut off in a fucking car wreck, and Lee would spin that shit as something she really needed to happen anyway. Yeah, she gettin' "lean and mean", right Roger?

OK, enough about the Bully's non-stop bullshit machine. Not much to say about this next nugg, but man it hurts:

Graph of US Housing Equity

Woof, that is a hideous hit to US net worth, down from $12.5 trillion or so, to below $7.5T and still falling. Keep in mind that is a 57 year chart.

If you extrapolate out some sort of bottoming process, it could easily go on for 15-20 years.

And that's just "stabilizing": We'll NEVER hit the peak values of 2006 in our LIFETIMES.

Couple this with NAR, who continues to try to make the salad days appear by reinstating practices that caused this mess to begin with:

Real Estate Associations Want Appraisers To Inflate Home Prices

The housing is still struggling because appraisers are being too tough assessing the value of homes.

That's the self-serving argument being made by realtors who are complaining that lower appraisal values of homes are delaying deals, ruining sales and prolonging the housing crisis.

Appraisal fraud was an enormous contributor to the unsustainable run up in prices during the boom period. Many (but not all) mortgage brokers and realtors referred buyers to appraisers that ALWAYS hit the number of the home purchase price

Now, NAR and other real estate lobbying groups, who are trying to maintain stay in business despite the total destruction of their market, are mobilizing a major effort to reach out to Congress and housing officials.

As NAR economist Lawrence Yun said earlier this week, "Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales." Instead, Yun and his bunch want appraisers who won't be too tough. As Yun puts it, "There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected."

And what about the RIDICULOUSLY LUCRATIVE easy-life of local moving companies? Well, they are finally getting their comeuppance!

Housing, unemployment woes leave movers shaken

Sinking home prices and a weak job market have forced normally restless Americans to stay put in an uncharacteristic shift that has, among other things, clobbered the moving industry.

Yeah, basically the moving trade is imploding. But still we need local Government bureaucrats to save us from these sleezy fuckers, who are barely holding on by their fingernails:

'Sting' targets unlicensed movers, so you're not stung

You can read the piece direct, but the comments tell of the outrage over such bullshit:

Native Oregonian says:
2 days ago, 04:19:51 PM
"When I was a kid my brothers and I made money by doing yardwork for neighbors, babysitting, having kool-aide stands, washing cars. and doing housework for neighbors. I suppose most of the above would now require bonding, licensing, permitting, liability insurance, etc. Thankfully, we were never sued and all our "clients" seemed happy with the work we did and even tipped us sometimes.

Yes, all these monstrous state agencies are supposed to "protect" the consumer but they just create more out-of-control spending government with perks and pers. A claim against a contractor needs to go through a long process and even when the contractor is licensed and bonded, if he (she) files bankruptcy, your claim could be released in the process regardless of their bonding.

Oregon Construction Contractors Board allows the licensed contractor 6 months to pay a judgement or settlement agreement before a bonding company is involved if they fail to pay. Oregon licensed contractors can appeal the decision and again this takes months. Who pays for any necessary immediate repairs?

So, do you think this highly over-regulated state will pay your claim? Nada. Many bonds are for $10K and if you as a homeowner get a judgement over the bonded amount, all you are left with is a piece of paper that you likely will not collect on, over the bonded amount of money.

I tried to find someone to do some weeding for me this summer. Every licensed landscaper, or yard worker wanted from $40-$67 HOURLY. They explained that was because of the high cost of the state requirements for licensing. I did not use them.

Did all the people working at Cessna that are unemployed or soon to be unemployed make that much money? I personally would hire an unlicensed mover, yard worker or babysitter any time I could and use my own resources to determine if I feel they are qualified and honest to complete the job properly.

As for my weeding, I found a very dependable, responsible, hard-working and honest person that quickly completed the work I needed done. I paid him $25 an hour and he was not licensed. I am very pleased with his work and more pleased that he is not licensed.

Guest says:
2 days ago, 04:50:15 PM
"Let this be a very important lesson to all you kids out there running those lemonade stands in front of your house,,, If someone say`s "we`re here to help you" RUN !!!!

Guest says:
Yesterday, 04:16:23 PM
"wow that is lame. hurting the little man trying to make a buck! everyone involved in this should be ashamed and apply for work out of the country, karma is a bitch!

There were 18 vehicles caught in this "sting". How many got tickets?

In Thursday's sting, there were 18 vehicle-related violations issued and one was placed out of service for safety violations.

Fucking ODOT scumbags, and they used cops as their THUGS.

This is a bunch of rag-tag, broke ass broke down and out workaday bastards who are just trying to do something to put food on the table, and ODOT hands out tickets to each & every one.

They raise the SPECTRE of unlicensed BANDITS stealing your shit on a meth-fueled, gun toting bender, when that is 100% UNADULTERATED BULLSHIT. These poor fuckers can barely afford to pay attention.

And that's where this thing is going: Vultures stripping the meat off damn near dead carcasses. Cops & ODOT stripping the poor, NAR wants to steal from new homebuyers by inflating the bubble anew.

Everybody in strip-N-flip mode.

hbm, will you please flip and strip me?

Dunc, do you have paper or plastic for my comics?

The Bedrock Of The Oregon Economy? Wishful Thinking.

Well, Summer is here & it's a truly glorious time to be in Bend!

Seriously! I don't know about you guys, but I am all about soaking up local fun stuff with the fam over the Summer. It's almost always some sort of "no-pay" non-Cali-banger chillax activity, costing at most $5 to park in some forest parking lot somewhere.

And it's sure as hell hard to write this blog. I'm being pulled to go for a walk in the cool morning air right now. Plus, things seem to go well in Bend over the Summer.

I think that'll change this Summer though.

Unemployment is coming out for Bend this week, and if it's anything like the State figures, it should be just awful.

Go to the OL-reliable OLMIS spreadsheet for State unemployment, and you'll see the 12.4% ADJUSTED rate for May was the highest on record, squeezing out the previous all-time high set in Jan 1983 of 12.0%.

The more-important unadjusted rate of 13.4% set in that same month, still stands as the record.

But we're getting there. We're still #2 in the nation, trailing only Michigan.

Which is pretty unbelievable. When you think of Michigan, you think of ---?

Right. Michigan has a single dominating industry that is kicking it's ass. Everyone knows what it is, and KNOWS that it is the one thing dragging down the WHOLE STATE.

But Oregon? What single industry "drag" do we have?

Is it tech? Well, sorta. RE? Yeah, sorta. The last gasping breaths of timber? Hmmm... maybe.

No, it just seems like Oregon AS A WHOLE, is just falling apart. This whole state is just reverting to it's mean.

And this may not be the WHOLE REASON, but it seems to me to spring primarily from one cause: Deluded narcissistic exceptionalism.

People here think their shit don't stink.

Everyone knows Mountain Comfort is going down the toilet. But still, the owner DeeDee Keith insists on sticking $1,000 SALE tags on plain-jane crap furniture.

She's going down, but she is still running insipid ads non-stop on KTVZ.

She's going down, but would rather PR-Market her way into oblivion, rather than cut prices.

She thinks her SHIT don't stink. And that if she pushes hard enough, she can convince you to buy her shit.

She went cracker-ass broke on Apr 14, but just a few months back, dished up a self-serving turd in the Bully, who was only to glad to oblige:

Divine downtown

DeeDee Keith jokes that she always promised Karma, her dog, that some day she would get them a better place to live.

And boy did she deliver, going from living out of a trailer at a KOA campground to becoming a successful Bend businesswomen.

... after a few years, Keith outgrew her leased spaces, so it made sense to her that when a large, prime piece of property on Wall Street became available, she would buy it.

And she did, explaining it this way: “I was young and dumb, but I had a good business plan.”

Keith was anything but dumb. She not only expanded her business, she also oversaw the construction and design of the new Mountain Comfort building from the ground up.

And speaking of up, this is where Keith made good on her promise to her dog.

She built up, as in a three-bedroom, two-bathroom luxury rooftop condominium above her store.

Taking the store elevator to the third floor, the elevator doors slide open and the Mediterranean-style design of the floor begins to emerge. The first doorway you pass is Keith’s manager’s condo, and between this condo and her condo door is a complete workout facility with an elliptical machine, treadmill and several weight machines. Keith explains this is where she alleviates some of her workday stress. Across from the workout area is a window door that leads to the outside deck facing Pilot Butte. This is Karma’s domain, where the builder constructed a 50-yard dog run and barking station. At the end of the run is a large, custom-built doghouse for the faithful dog.

The whole piece is just endless self-serving tripe. Standard Cali-Banger bullshit. Someone who just thinks they are God's Gift.

And about 6 months later, it was all gone. The TAINT of the Bend Bully PR AIDS strikes again.

Here's another Shit Don't Stink piece from the Oregonian:

Portland-area retailers try to retool leases

In fall 2008 when Storables' Fischer realized how the recession was hitting his newest store in Mesa, Ariz. -- where sinking home values and consumer confidence had tanked early on -- he tried to set up talks with his landlord, a mall operator he said already was struggling to pay for an expansion.

By January, when Fischer started trying to meet with landlords, he already was late to the game. Many of the larger tenants already had begun talks. Adding to the logjam, he said, larger chains such as Williams-Sonoma, Chico's and Anthropologie often start with more favorable leases tied to sales or whether certain neighbors stick around.

"It's the big national tenants, not the regional or small local, that can really work that," said Fischer, adding that one of his landlords told him that having an empty space was better financially than offering lower rates.

A drop-off in rents, Fischer said he was told, could leave a lender wondering about the value of the landlord's building. Such a scenario could trigger a review that could mean the landlord has to make up the difference to the bank.

WTF? So these landlords & lenders are in this game of chicken regarding pie-in-the-sky lease rates. They would actually rather have their space EMPTY, than a paying tenant.

The grass is greener thinking. Always jam tomorrow, NEVER TODAY.

This is just psychotic, yet widespread thinking. Hold out for $2.50 a foot, even though vacancies are 90%.

The thinking is, "I KNOW I could have gotten $2.50 a foot a few years ago, and the value of this building imputed at that rate is $X million, but if I were to actually take $1 foot, it would be $X/3 million, and since I owe $2X million, I can't take $1/ft or the bank will come after me".

So everyone in this weird fucking state is in state of suspended animation, always believing in some Pollyanna, dumbshit dream that TOMORROW WILL BE A BETTER DAY.

Always. Seriously, look at this headline from TODAYS Bully:

Summer is finally here — will the tourists come now?
Prospects for Central Oregon could be worse - July especially should see more visitors - but don’t expect a record-breaker

On the heels of an abysmal winter season, Central Oregon’s tourism industry is hoping for a boost in business during its ever-important summer season.

That could come from a range of events planned for July, as well as from perceptions of a rebounding economy, but tourism officials still don’t expect a full recovery or at least stabilization until at least 2010.

Earlier projections of a 25 percent drop in tourism this summer have softened somewhat, but most lodging operators still expect to be down from last summer, Audette said.

She expects the region’s resort properties to do well this summer because they offer the feel of a vacation getaway while still being a short drive from the Seattle and Portland markets.

Look at just how much HOPE & DREAMING there is in there. The whole piece is just hopeful bullshit. Bend is NOTHING but smoke, mirrors, and illusion. You can NEVER count on anything to be real. Here's a dreamscape excerpt, included in almost every Bully article EVER WRITTEN:

Room-tax collections are the most reliable indicators of the health of the tourism industry, which is estimated to have a $571 million annual impact on Central Oregon’s economy.

100% BULLSHIT. That $571 mill is 100% MADE UP. But it is printed damn near every day in the Bully. Why? Cuz this place is Kool-Aid crackerland.

DeeDee Keith PR-Marketing her store into oblivion, rather than just cutting price.

Portland commercial landlords & banks playing cat & mouse so that some effemeral and 100% FAKE building valuation can be hit with lease rates that aren't even being collected.

Bob Thomas filing appeals to keep open a dealership because he thinks he's entitled.

Roger Lee & Alana Audette lying day-in and day-out about how important they are to Central Oregon, and the City of Bend (you & me) are actually FUNDING THEIR BULLSHIT.

There's a fundamental thread here: Oregon cultivates DREAMERS.

Now this is great when things are going OK. Even dreamers have their place on the upswing.

But man, on the downswing, they do All The Wrong Shit. The HOLD OUT, when they should BAIL OUT. They don't know when to say WHEN. They don't know when to STOP THE BULLSHIT.

Audette STILL claims $571 mill in tourism, DESPITE THE FACT that even SHE ADMITS tourism is DOWN DOUBLE DIGITS.

"Yes, room rates are DOWN 25% YoY, but that $571 mill figure I 100% MADE UP last year STILL STANDS, YOU DUMBFUCKS!"

Roger Lee, same deal. EDCO has "helped" land blah-hundred jobs, bringing in blah-many-millions to the Cent OR economy. 100% UNADULTERATED BULLSHIT.

This fucking place is run by RETARDS. Pie-in-the-fucking-sky idiots. The whole fucking state is that way, it's just especially severe in Central Oregon.

And we're seeing the upshot. #2 in unemployment.

Can't really narrow down the cause... until you realize it is just general self-delusion.

---

OK, I can't let it go this week without a total reprint of the NYTimes piece on the CRACKAGE OF BEND. It's the only way I can circumvent the comment posting limits.

This is such a great piece, because it addresses something KNOWN to Cent OR locals for many moons: Cali-Bangers are the root cause of ALL EVIL.

What sweet fucking redemption to have a NYTimes piece that essentially blames these equity locust motherfuckers for ALL OUR ILLS.

Slump Dashes Oregon Dreams of Californians

By WILLIAM YARDLEY

BEND, Ore. — Susan and Mike Telford had a plan back in the boom years in California. They would sell their house outside Fresno at a solid profit and take their equity to this sunny mountain city to build a better life, a fresh-air future in Oregon.

“We wanted to lose the commute, to lose the smog,” Mrs. Telford said. “We wanted to lose California.”

They moved here in 2006, when Bend was one of the fastest-growing places in the West and money and migration from California fueled that growth. Now the Bend area’s unemployment rate, at almost 16 percent, is one of the highest of any metropolitan area in the nation. “For sale” signs dot desert-toned, unfinished subdivisions. Luxury furniture stores downtown are going out of business. San Francisco chefs have fled.

The freefall has made Bend a succinct symbol for the economic perils of “lifestyle destinations” in the so-called New West, recreation-heavy communities where jobs have been heavily tilted toward construction and services and where many of the new residents were self-made exiles from California cashing in on their overpriced real estate. Bend, a former timber town that now has 80,000 residents, was particularly popular among those drawn to the often rainy Northwest because it is located on the sunny side of the Cascade Range.

Now the Californians who contributed to Oregon’s growth are in some cases adding to its economic struggle. As of May, Oregon had the second-highest unemployment rate in the nation, at 12.4 percent, behind Michigan. California, which has not released its May figures, ranked fifth in April.

While some other states with high unemployment, including Michigan, have seen their labor forces shrink, Oregon’s labor force has grown. Economists say some of the growth appears to be driven by people who moved here with money they made in California, whether from real estate or stock market investments, and expected to get by but now must look for work.

“It’s just so depressing to hear them because they thought they had life handled and they don’t,” said Bobbie Faust, an employment counselor who works for the state in Bend.

The Telfords are among those facing trouble. They had presumed they would be able to sell their house in Fresno for more than $300,000 to help pay the mortgage on the new house they bought near the Deschutes River in Bend for $475,000. But the Fresno house has yet to sell, and Mrs. Telford, an accountant, has lost a series of jobs at small firms here that she said had downsized. The couple’s only income now comes from her unemployment checks and her husband’s salary as a high school teacher.

“The cash flow is negative,” Mrs. Telford said. “This will be the first time we’ve had to go into savings.”

Not all of the newcomers are from California, of course. Lost equity, lost jobs and the possibility of foreclosure also threaten people who moved here from just across the Cascade Range, on the wetter western side of Oregon, as well as some from Seattle or the East. Measuring California’s economic impact on Oregon and its struggles is difficult, and economists say that Oregon, which has less than a tenth of the population of California, has not always been directly affected by its neighbor’s fortunes.

Still, just as other places in the West have blamed California transplants for treading heavily into town, the words “California equity” roll off many tongues here in Deschutes County with particular resentment these days.

“California immigrants can never win in Oregon,” said Philip J. Romero, an economist who has advised governors in both states. “In a boom, ‘They are crowding the roads and bidding up house prices.’ In a bust, it’s: ‘They alone caused the price of my house to drop by hundreds of thousands of dollars. They came up here without a job, and now we can’t absorb them and they’re competing for my job.’ ”

Carolyn Eagan, a regional economist for the Oregon Employment Department, pointed to federal data showing that the overall percentage of personal income from dividends, investments and rental income in Deschutes County was almost 26 percent in 2007, the latest year for which data were available. Compared with an overall state rate of slightly less than 21 percent, the figures suggest that people here, more than elsewhere, have relied on income from sources other than a steady job.

“Shhh,” Biff Ingels, a transplant of four years, standing outside the main job counseling center here, said when asked where he had lived before. “California,” he said in a whisper.

A cultural shift appears to be under way. One of Bend’s leading restaurants had been Merenda, whose chef, Jody Denton, came from San Francisco in 2002. Under mounting debt, Mr. Denton closed the restaurant in January and left for a job in Australia. Several people involved with the restaurant before it closed have reopened it under a new name, 900 Wall, its street address. The menu has been recast from mostly French and Italian cuisine so that it now incorporates more ingredients from the Northwest and has slightly more approachable pricing.

“We’re trying to present ourselves as a local restaurant,” said Cliff Eslinger, the executive chef. “We’d relied far too heavily on outside forces.”

Another casualty was Bend Living, a glossy regional magazine driven by advertisements for high-end homes and luxury furniture. Kevin Max, the magazine’s former editor, is planning the first issue of a new magazine about Oregon culture and history, based in Bend and set to make its debut this summer. It is called “1859,” a reference to the year Oregon entered the union.

“Bend Living was about Bend’s emergence into 24-7, go-go-go, irresponsible construction and people living beyond their means,” Mr. Max said. “1859 is kind of National Geographic meets Condé Nast Traveler. It’s about Oregon, so it’s all about sustainability.”

Locally, sustainability is a challenge. Bend’s job market has not proved diverse enough or deep enough to provide jobs for the newcomers who suddenly need them. “Poverty with a view” is how many people describe Bend before the boom. Economists say the city’s sudden abundance of investment income and housing equity from newcomers made Bend seem more secure than it was. While experienced people like Mrs. Telford, the accountant from Fresno, struggle to find work, there are longer term questions over how the area will support its newest residents.

Zachary Lauritzen, a student teacher at Summit High School, on Bend’s west side — the side some residents call “Little California” — said he was teaching a lesson in government when the topic prompted him to ask how many students had lived in California.

“Half of them raised their hands,” Mr. Lauritzen said.

Buster, please uncurl from fetal position, leave LaPine, and come back!

hbm, I been saving special titty-fuck for you so long!

tim, please thwack my nipples for bad apostrophe usage!

"Bend is in a depression..." -- Bob Thomas

Well, there you have it, folks.

Reputable business man telling a house subcommittee, and then printed in our local rag:

BEND IS IN A DEPRESSION

Wow. THAT makes it official. Although, we've been saying that for over a year.

I thought that was pretty stunning, to hear someone say that, much less have the Bully print it.

And not to belabor the point, and in case you've been in a cave for 2 years, the CAUSE of our current DEPRESSION is the REAL ESTATE INDUSTRY. Pure and simple, endlessly promoted and pumped and dumped on us, it was the real estate bubble, and it's inevitable collapse that is THE CAUSE of our current problems.

I feel like I have to say this sort of thing, because it's starting to spread & manifest itself in all sorts of collateral effects. Like Bob Thomas losing his dealership.

Almost any industry fueled by credit is getting it's ass waxed.

So you might think we're suffering a "credit bust", which we are, but it's primary vehicle for expansion was RE. We're not in a Depression because of zero down car deals.

The rest of the article about Thomas is standard self-serving tripe, standard issue when the Bully does it's usual BS. Even Greg Walden hops on the bandwagon, questioning the "wisdom" of closing ANY dealerships.

I just have 2 observations about this:

1) I still DO NOT understand why Gary Gruner in Madras is still alive.

I would have guessed they'd be The First GM dealership closed in Cent OR, GM bankruptcy or not. Gary Gruner? WTF?

2) Driving around auto row, and Bob Thomas' lots, there are NO CARS for sale in Cent OR.

Well, not "NO CARS", but a hell of a lot less than there were just a year ago. You could go to auto row on the East side, and see a ridiculous number of cars over there. THOUSANDS and THOUSANDS.

That was one of those businesses that was so irrational, I simply could not understand how any of those dealers survived. There are STILL too many.

And that doesn't count the innumerable used car dealers, whose numbers are now being swelled by new car dealers losing their franchises & joining their ranks.

I think you'll see a winnowing in the numbers of dealers, especially on auto row. There is just a ridiculous number of them. And the number of cars sold has already plunged, probably far worse than most people think. Ask Bob Thomas.

---

Proably the most amazing piece I've read since this whole RE Implosion began, is a piece posted in the comments by PopGoesBend. Excerpts:

Median home prices drop below 1989 levels in some parts of Southland

Properties in several areas are selling for less than they did 20 years ago, and that's not even counting the effects of inflation.

John A. Beatrice, 55, bought his spacious two-story Spanish-style house there brand-new for $120,000 in 1989. But he never imagined his neighborhood would drop off the charts. In April, a slightly larger home two doors away sold for $66,500.

That's just over half the $130,000 it went for new in 1992. In 2005, that house sold for $330,000. ...in 14 Southland ZIP Codes, mainly desert communities in the Antelope Valley and Inland Empire, median prices have fallen below levels recorded in April 1989, according to MDA DataQuick, a San Diego real estate information service.

That means thousands of homes in those neighborhoods -- even houses barely 20 years old and in decent shape -- have lost every dime of their appreciation, giving back not just the gains of the recent bubble but steady increases logged over a generation.

The April median price in Beatrice's Lancaster ZIP Code of 93535, for example, was $87,000. That's down 74% from a $334,500 peak price in 2007.

Even worse was the 92410 ZIP Code in the city of San Bernardino, which covers several older neighborhoods. Its $61,000 April median represents an 84% drop from the peak of $370,000 in 2007.

Prices also tumbled below 1989 levels in neighborhoods in Palmdale, Hemet, Barstow, Desert Hot Springs, Victorville, Highland, Santa Ana and Oxnard, according to DataQuick.

Several other inland communities, including parts of Moreno Valley, Banning and Rialto, had median prices that were only slightly above 1989 levels and below the April 1990 median.

I always thought that Cali-Bangers would take it the hardest. The California Miracle was just that; a mirage, a figment, a dream.

I honestly had no idea where Palmdale was, and come to find it is in the barely commutable quasi-desert outskirts of LA's Northern suburbs, if you can call living 2-3hrs from LA in gridlocked traffic a "suburb".

Sound familiar? Out in the fucking desert? 2-3 hours from any real metro area?

Although I was sort of surprised about Oxnard having fallen below 1989 levels. What the fuck is next? Santa Barbara?

I wouldn't give a handful of my own shit for a house in cracker-ass Victorville. But Oxnard? I've been there, and it was OK. Ocean's just right there. Oxnard falling below 1989 levels is pretty strange.

And it's happening elsewhere, including the central valley:

Back to the future home prices

Real estate bargain hunters in Stockton can buy property for less than the sticker price of a Cadillac Escalade in today's market.

San Joaquin County real estate listings contain at least two dozen homes priced less than $50,000 and at least one as low as $15,900. These are prices not seen in California since the 1970s, a decade in which home prices climbed from $23,000 to $84,000.

The 1,300-square-foot house is priced at $15,900, a 92 percent discount from what property records show as a $180,000 selling price in August 2005.

My main takeaway on this piece is NOTHING IS SACRED. "Rationality" least of all. Prices staying above some price point that "makes sense" is 100% Grade AAA Bullshit.

Prices can AND WILL go to INSANE price levels. Prices will slice right through the "Rental Arbitrage Point" like a hot knife through butter. People will start questioning EVERYTHING when all sorts of "logical" arguments start to fall.

You'll soon be able to BUY A HOUSE IN BEND FOR LESS THAN THE RENT. Why?

Because "prices" are always based on CREDIT. Credit is valuing a STREAM OF MONEY, NOT A PILE OF IT. Credit is "If I give you this PILE OF MONEY, you will give me 360 payments of $X EVERY MONTH".

THAT is what's going away. Not for everyone, but for a hell of a lot of people. THAT is the "rational assumption" that will fail. No CREDIT means people will go back to paying for stuff with PILES OF MONEY, not streams. And there ain't much money left.

For now.

I think, FOR NOW, the primary economic theme is DEFLATION.

But our government is altering the natural course of things by throwing TRILLIONS OF DOLLARS at an essentially stagnant economy.

Not today, but soon, there will come a day of STAGFLATION. And it will boggle the mind. Money in this country will be worth nothing.

Houses probably WILL go up at that point. Well, at least compared to holding cash. Better to have your cash in some shack losing 5%/yr, than in the bank losing 15%. A 5% LOSS will actually feel like a good deal. People will treat cash like Ebola.

But not now. But folks, watch the dollar, and watch long government bonds.

The dollar index, after a long plummet from 120 in 2002, fell to as low as 70 last year. It had a dead-cat rally to 90, but has now fallen back to the high 70's. The World is getting nervous about the Obama Jeebus Printing Press.

Similarly, 30 year government bonds, declared DEAD a few years back when the US Gov't was never going to borrow money again (man, that never gets old), has fallen from it recent EUPHORIA DEFLATION FUELED all-time highs over 140 (My God!), clear back to pre-panic prices, around 115.

I would watch this. The dollar has long been signaling an incredible devaluation in our currency. But luckily, the Chinese & others have seen these losses counter-balanced by recent huge gains in treasury prices.

At least till recently. Now the double whammy of declining dollar and treasury pricing could cause a Worldwide credit panic, as the US has to print its way out of bankruptcy.

And that means STAGFLATION.

---

Portland is finally starting to really hurt in the current RE Depression. There were some good pieces recently.

Stalled Portland luxury development shows depths of recession

(Tom) Moyer's four decades of empire building smacked into a wreck of a recession April 10, when he halted construction on his $170 million Park Avenue West tower.

That morning, Moyer paid 100 workers in the pit spiked with rebar. On Wednesday, the final three workers climbed out of the hole for the last time.

Commercial lending has gone net negative.

I thought that graph was interesting. Lenders have gone net negative on commercial RE, taking more out in payments than they are lending. Again, the whole concept of STREAMS OF MONEY, is dying.

In another piece, we see that residential in Portland is also moribund:

Portland housing market still gloomy

Portland-area home owners continued to weather a gloomy market in May, another sign that talk of a economic recovery is premature for the region's housing market.

The Regional Multiple Listing Service reported today that the median price for homes sold in May was $250,000. That's down 13 percent from May 2008 and 17 percent from the August 2007 peak.

But the number of closed sales in May lagged last year by 23 percent. Pending sales, seen as a predictor of future closed sales, was down 7 percent from a year ago.

The inventory of unsold homes -- the time it would take to sell all homes on the market at the current sales paces -- dipped, but remains high at 10 months.

Portland is actually holding up pretty well since it does have... stuff. Unlike Bend, which only has RE, and nothing else.

Folks, don't believe the calls of a "RE-bound", and "we've GOT TO have hit bottom, it can't go any lower!", and such. We've heard both ad nauseum from RE "experts" (Bratton, DuBois, et al) quoted in the Bully going on 2 years.

It CAN go lower, and it WILL go lower.

Look at the price reductions in the cracker-ass middle of the desert in Cali: DOWN 90%+!

I don't think we'll see that, but 75-80% DOWN from the top is VERY POSSIBLE.

I mean, Holy Shit, we had $396,000 MEDIANS for the love of Christ! We're in the middle of ASS NOWHERE!

We'll hit $125K medians. If you DO CARE about capital preservation, and can tolerate renting, DO SO. Do it for 5-10 years. You will be able to make good money in 5-10 years from now.

Work, pile up your money, and shoot your wad in a few years. You'll have to pay cash, or nearly all cash, but there will be good money to be made.

NOT in cap-app. NO. RE isn't going to "go up" in any appreciable manner for 2 decades. BUT you can get a cash-flow positive shit-shack, that pays you a few hundred every month, and that will KILL what you could get elsewhere.

---

Finally...Any hbm sightings recently? Is he actually gone? Was the coincidental exodus of he & Brucey part of a Mormon love triangle?

hbm, come back! With you gone, there is no one to twist our nipples!

Look! In the sky! It's a bird! It's a plane! It's hbm!

hbm, please come back! My leather bras have shrunk to just B-cup! I need you!

This Blog Better Have 800 Comments This Week, Or I'm Shutting It Down!

Oh geez.

The pre-occupation with comment counts is rearing it's ugly head... again. People are starting to make comparison parrellels with Bend RE and such. Funny.

I wouldn't look for those days to happen again. The high water mark was 1,076 on Sept 6, 2008, a time just after being mentioned on patrick.net, when traffic spiked massively. Also I think there was much traffic from googlers searching for "Britney Spears Naked", or something right around that time. Then the Google's shutoff.

Oh well.

I'm not running this rock for comments numbers: It's primarily to have a no-holds barred, 100% unmoderated discussion about Bend RE & Business, although there isn't much off-limits, and in a similar vein, it's to expose ridiculously biased Bend media reporting.

If I accomplish those 2 things to some extent, I'm good. Plus, I like it. It's my sort of "thing". If "My Thing" was to manifest itself in truck form, it'd look like this:

The Official BB2 Milk Truck.

I don't know this dude, but a guy who builds a drag strip, then puts an 825hp noise-maker under the hood of a POS milk truck, and then just sits and burns slicks all day, is fucking All Right With Me.

That shit is Awesome! Kenny Clouse, 65, is out in Alfalfa tearing the shit outta a racetrack he built himself. That is just kick ass. I salute you Kenny, you're the kind of people Cent OR NEEDS.

Some interesting stuff in the Oregonian this week. FIrst, the whole Biomass Fuel Dream is Dead. Not "dying", it's dead.

The Biomass Ponzi Scheme is something that was a variant on the Perpetual Motion Machine. Only in Bend does Perpetual Motion Still Fly, with Bully pieces like:

• Entrepreneur thinks air is the new gas, but experts say the idea has some leaks
• Electric-car evangelist sees a battery-powered future
• Powered by innovation
• Garbage never smelled so sweet

These sorts of things happen every so often, when Arab Shieks think their shit don't stink. In Bend they are just moronic as hell. That "Powered by Innovation" piece was a deceptively titled piece (funny how that happens) about the REDMOND ALBERT EINSTEIN who dragged a car tie behind his car to generate electricity.

Ironically, the Oregonian is running a piece on the collapse of the Biomass Energy Bubble, a mere 18 months or so after it started, while The Bully, as usual, is running a sketchy piece that defies about 42 laws of Thermodynamics:

Garbage never smelled so sweet
InEnTec of Bend has partnered with Waste Management Inc. to build its trash-to-gas machines at landfills across the country. The result could be a renewable energy dream — and InEnTec is promising big returns for Central Oregon, in the form of gree...

By Andrew Moore / The Bulletin

Two weeks ago, Bend-based InEnTec LLC announced a joint venture with Houston-based Waste Management Inc., a Fortune 500 company with more than $13 billion in revenues.

While a big step for privately held InEnTec, a small waste-to-energy company that relocated to Bend last year from Richland, Wash., it also promises big returns for Central Oregon.

The new joint venture, called S4 Energy Solutions LLC, will be based in Houston but is opening an office in The Old Mill District, adjacent to InEnTec’s office.

S4 will eventually employ more than 20 chemical and other engineers, generally earning more than $100,000 a year, according to Jeff Surma, a founder of InEnTec and S4’s first CEO.

They are the sort of high-paying green jobs that politicians love to promise, working with technology that turns everyday garbage into fuel and other products without any harmful emissions.

But InEnTec hasn’t been visited by presidential candidates promoting renewable energy, or sitting senators touting the green spending in the stimulus bill. “You’d think it would be the perfect opportunity,” joked Surma, who stepped down as InEnTec’s CEO two weeks ago to take the same position with S4, though he will stay in Bend.

Perhaps converting garbage into energy isn’t as sexy or as simple as harnessing the sun and wind. Rather, Surma chalks up the company’s “under the radar” existence to emerging technology — using super-hot plasma to convert trash into synthetic gas that can be refined into hydrogen or ethanol — that is only now ready for commercialization on a scale that could make it as well known as the solar panel or the wind turbine....

Oh my goodness. The old SUPER-HOT TRASH COMPACTOR that turns shit into gold.

What's funny is that InEn Tec was not bought out or some other super-sexed transaction that EMBIGGENS the company, or some such... it barely gets a word, but the CEO QUIT.

In case you're wondering How This Ends, it was covered in today's Oregonian:

Northwest's biofuel boom goes bust

In two short years, the Northwest has gone from biofuels boom to biofuels bust.

The boom began in August 2007, when Imperium Renewables opened a 100 million-gallon-a-year biodiesel plant near Grays Harbor, Wash. A month later, Pacific Ethanol opened a 40 million-gallon corn ethanol plant in Boardman. In June 2008, Cascade Grain opened a 113 million-gallon corn ethanol plant in Clatskanie.

Encouraged by tax breaks and Oregon and Washington standards designed to require biofuels' use, the companies promised environmental benefits on an industrial scale, a quantum leap from smaller-scale producers making fuel from cooking grease and Northwest crops. Nearly 30 more projects were under discussion.

Then came this year.

In January, Cascade Grain filed for bankruptcy six months after it opened, idling its plant and putting a $20 million loan from the state of Oregon in jeopardy. Imperium, whose grand opening was attended by both Washington senators, idled its Grays Harbor plant indefinitely, laying off 24 workers in March.

And Pacific Ethanol, which received $14.6 million in Oregon tax credits for its plant, filed for bankruptcy for five of its subsidiaries last month, including the subsidiary that owns its Boardman plant. It warned that it has enough money to continue operations only through June.

Same shit, literally just a different day. Car towing wheel, plasma-buring trash compactor, biomass bullshit. All are the same. All are Classic Oregon Ponzi Scheme Ripoffs, disguised by physics-defying bullshit super-big-hair technology.

THIS is why Oregon is doomed, this is why Bend is doomed. The physics of all this is 100% Grade AAA Bullshit.

Note, I DID NOT include PV Powered. It could be argued that PV Powered is Yet Another Gobmint Funded Boondoggle that will collapse when credits are yanked, something that apparently won't happen for awhile, as candidate Obama unwittingly committed to this during a PR-fueled junket way back when, when he shook hands with PV's CEO.

The diff between InEn Tec & PV Powered? One BURNS shit, the other absorbs & converts energy from an autonomous source.

I'm not saying PV is on it's way to UNENDING RICHES. It just has a fundamental plan that is actually supported by PHYSICS. It's NOT a Perpetual Motion Machine. Wind power is similar. It's really already there, whether we harness it or not.

Again, I feel the ROI on such stuff is negative, for quite awhile. The fundamental nature of people is to maximize The Now: Burn the CHEAPEST FUEL now, and fuck the future, even if it means cooking our kids in an Easy Bake Oven. The RE Bubble is Yet Another Illustration of our inherent Fuck The Future outlook.

THAT is why Bend attracts this sort of grifter. Grifters THRIVE on those who say Fuck The Future, and live for The Now, even if the NOW is an illusion, and The Payoff is a fundamental VIOLATION OF BASIC PHYSICS.

The Biggest Payoff out there is just that: A physics-violating super big-hair technology perpetual motion machine. Look around, we're drawing these brand of grifters like flies.

You wondered What Is The Next Big Bubble After RE? Well, it was supposed to be Alternate Energy (right Brucey Buttplugs?), and it's already collapsed. But as usual, the Bully continues to run stories that It's Better Than Ever In Bend!

---

Speaking of Compressed Collapse Cycles, Luxe, successor to Norwalk, went down. Dunc had a nice post about the 'Comings and Goings' of such business, and is well worth a read.

If there is a retail sector more bloated and ridiculously outsized for a town the size of Bend, it is auto's. I NEVER understood how all the auto row shit, and the 3rd St sellers, and vast underbelly of used auto sellers survived in this town.

They just built and opened new dealership after new dealership, and I was baffled. Who the fuck is buying all these cars? Not me. My NEWEST auto is 8 YEARS OLD. And I have no intention of buying another, unless I am made an offer I cannot refuse.

Which may happen. We're in that strange saddle point when dealers are literally contractually forced to gorge themsleves of stock, and there ain't no one buying despite some damn good prices.

Huge amounts of wealth is just drying up and blowing away, like so much STD landscaping, as Matt Thomas grouses about the loss of his Chrysler franchise:

“The big loss is losing the (Chrysler) franchise,” he said. “I could have sold the franchise for $7 million to $8 million two years ago.”

I can imagine the Bob Thomas franchise has lost at least that much. WTF is GM thinking leaving the only GM dealership in MADRAS? That's the stupidest thing I've ever heard of!

I can understand almost everything else in this auto dealer collapse, except that. Pulling Thomas' GM franchise is moronic in about 12 ways. Having to drive to MADRAS to buy a GM vehicle essentially means NO ONE WILL BUY GM IN CENT OR. My God.

Aside from that, nothing should really surprise anyone about how shitty it is going to get for Bend dealers. There are simply WAYYYYYYY too many of them. Still.

Start at Costco, and check the Subaru dealership... they're just starting to close. Tons of that shit will close. I put NO STOCK in the idea that the Porsche or Mercedes dealers on 3rd will survive in their current form. Many, many millions are going to be lost on these franchises getting boarded up.

We bitch about Luxe, Rising Star and all that going down... fuck, all the furniture stores in Bend weren't worth what a single half-assed auto dealership is worth. And they are closing them down in droves.

---

Bend is STILL ridiculously overvalued.

Is your home still overvalued?
Report says half of the most overvalued markets are in the Northwest
Wenatchee and Longview were third and fourth on the overvalued list, with Bend, Ore., Bellingham and the Portland area (including Vancouver) seventh, eighth and ninth.

We've been nearly cut in half, and we're still in the top 10. Here's a link to the actual PDF report by IHS Global. You have to fill out a short info form to get it, something I am too paranoid to do.

I guess I find it amazing that despite the collapse that has and still is going on in Bend RE, that we reached such a RIDICULOUS overvaluation, that we have been CUT IN HALF, and we're still in the Top 10 most overvalued MSA's in the country.

We're right around $200K medians folks, and all the talk here of $125K is not bullshit.

There is all sorts of macro (oil is back near $70/bbl) and micro reasons (wholesale collapse of Bend's auto, furniture, {{your favorite industry here}}) that medians can go down to $125K. All I can really bet on is it will be a slow, arduous, and wealth destroying process.

Take a look at this graph by OFHEO (Thanks to PopGoesBend). Drag the "time-line" back to 1985. That gives a GREAT perspective on just how whacky things in Bend got since 2005... but really it shows that Bend has been on a multi-decade tear.

I don't see that 300 HPI level being breached in my lifetime. If we're back to 2007 price levels in the next 15 years, I would be amazed. We're fucked.

OK, here's what you're waiting for...

Bend RE fallen so much, it HURTS MY NIPPLES!

Buster, pleeze cum back to white girls. We love you long time too!

I promise to take off this shirt, if I get 800 BB2 comments this week...

On A Clear Day, You Can See GM Going Broke...

Steve Larsen died, and that's a damn shame. It really is. Probably a good guy, had kids & a wife. The sort of Model Citizen Bend Needs.

Really. He's actually exactly what Bend needs and Wants.

We talk about the relentless selfishness of Bend PR & Marketing, drawing people in and selling them gobs of Bend bullshit, most of which they don't need.

And the whole "Work Hard, Play Hard" motif is a thread that runs throughout. Search "Olympic Athletes" on the Bully. "Olympic Athletes are everywhere you turn...", and so forth.

Then they get to the sticky business of a Bend Super-Athlete Posterchild Success... dying. And not just dying... Dying While Exercising. That's... not good... for business.

Hmmmm.... now what?

Is it possible all this Mad Pursuit of Exercise Excess is... gulp... Bad For You?

No. No, no, no, no, no. No. It's fine. It's STILL good for you. And as May West can attest, Too Much Of A Good Thing Is.... Wonderful.

And That is what Bend really stands for. Excess. Too Much.

But let's say you are John Costa, and you can't let the lemmings start to question The Message... what do you do? You obfuscate, of course.


39 years old, a pro athlete collapses and dies. How can this happen?

Larsen was declared dead at 7:05 p.m. Tuesday. He died from sudden cardiac arrest, but what caused the cardiac condition remains unknown.

“There’s a lot of things that can happen,” said Deschutes County Medical Examiner Steve Cross. “And the problem here is this very vigorous, healthy, relatively young 39-year-old who is a world-class athlete dies while exercising.

“It’s not supposed to happen. It’s not supposed to happen, and it did.”

“Did exercise cause it to happen? No. He has something that has yet to be explained,” Cross said.

Cross said an autopsy showed no obvious signs of coronary heart disease. Larsen’s heart has been sent to a laboratory in the Midwest where it will be analyzed.

...

“When you’re young and you’re healthy and you have potential underlying conditions, it’s challenging to find them,” he said.

Both Widmer and McLellan said heart conditions can lead to symptoms like shortness of breath, or even to sudden death.

“For some, the first symptom is sudden death,” McLellan said.

...

“Our vision of Steve is the healthiest, fittest guy you would ever know. He was an absolute specimen,” said Teague Hatfield, owner of FootZone, a local athletic store. “He’s always the guy who is faster and stronger than everyone else, and just a good guy.”

Michael Larsen, also an athlete, said he believes a grandfather died of a heart attack, and his father is in poor health. But he said he’s not aware of any family history of heart problems. He believes his brother did go to the family’s general practitioner once he had trouble breathing, but he wasn’t positive.

OK. Read that. He died from cardiac arrest, but What Caused His Cardiac Arrest remains "UNKNOWN"? What? Really?

It was his fucking HEART, you dumbfucks!

They're sending this guys HEART TO A LAB. THAT is how serious this shit is to Costa.

If I drop dead on a jog, will they send MY heart to a lab? Fuck no, they'll throw my fat ass in the nearest dumpster and call it good.

"He died from sudden cardiac arrest, but what caused the cardiac condition remains unknown."

WTF? That's like saying, "He died of a GUNSHOT wound, but the source of the gunshot is STILL UNKNOWN."

IT WAS A FUCKING GUN!

Holy shit, talk about Collateral Damage Control:

It’s not supposed to happen, and it did.

Did exercise cause it to happen? No.

This is the fucking CORONER! He hasn't even looked at the body, and the fucker ALREADY has a NEGATIVE DIAGNOSIS.

Q: "Did he die from exercise, Doc?"

A: "FUCK NO!"

Q: "Was he exercising when he died?"

A: "Bitch, I'm going to get my gun if you mention that again!"

Q: "Was it his heart, then?"

A: "WTF? How the fuck should I know, Bitch! I haven't even seen the body!"

Q: "But there's a quote in the paper where you say it wasn't exercise, it was 'something yet to be explained'. So do you know the cause or not?"

A: "FUCK YOU! I'm calling Costa, Hollern, and the fucking cops!"

If you EVER wonder just what the fuck is going on in this town, RE-READ the piece covering Larsen's DEATH WHILE EXERCISING. Read how many times they tell you how he died... then they tell you THEY HAVE NO IDEA HOW HE DIED. THEN they tell you confidently how he DID NOT DIE.

World-class athlete. Good guy. I feel very bad for his family, wife & kids. It's a loss.

But to MAGGOTS like Costa, it's an incursion into THE KOOL-AID MESSAGE. A chink in the fucking armor. Larsen's death was an EXTREME INCONVENIENCE to people like Costa.

People like Larsen are Marketing Piece #1 to the Wall-To-Wall Olympic Athlete image that has been crammed down our throats. And one of them DYING while doing Their Thing, is Bad, BAD news for Costa.

Re-read that piece. It ain't about Larsen. It's about preserving Bend PR & Marketing at all Cost - ahs.

---

So we got unemployment figures for Bend this week, and yawwwwwwwwwwwn they were absolutely awful.

Just another in a long line of nails in the Bend Miracle Coffin.

I don't know about you, but I saw U-Hauls this weekend as far as the eye could see. They are everywhere.

And this is it. The Big Weekend! Kids outta school in under 2 wks! Mommy & Daddy are outta work!

Time to LEAVE BEND! Yeah!!!!

This is it, folks. You won't hear it anywhere, except maybe on the Wandering Eye. The Great Gutting of Bend has begun.

I would bet that 5-10% of this great City will pack up & go in the next 90 days. That's between 4-8,000 people who are going to Abandon The Bend Dream.

No? Drive along Purcell, between Costco & the hospital. Drive to the base of Pilot Butte. That there is Rental Central, and that motherfucker has alone provided a Big Boost to the FOR RENT sign business. EVERYTHING is for rent up in there.

Drive around, look on craigslist. Bend is going to STD Rental Hell.

And there'll be no one to rent to. 4-8K are leaving in the next 90 days. And it ain't gonna be picked up in survey's of UNITED VAN LINES.

OK, that's for fuckers WITH MONEY. No one in this shithole, bled-dry town has a fucking cent.

No... people are leaving in U-Hauls and their fucking CARS. They are selling or abandoing their shit, and just driving away.

You watch: We'll see population signs on the outskirts of Bend that DO NOT read "80,995" in 8-10 years. It'll be back in the 60's.... or 50's...

---

So we're in the early stages of a recovery, right? We've got our Green Shoots, recovering DJIA, Spring is in the air, and such...

Market look fantastic! All my stuff is recovering nicely, thank you very much (except the stuff that went Chap 11, but let us not talk of trifles...). The market, the most dependable indicator we've got, is pointing to a nice bounce in The Real Economy... by the looks of it, probably later this year.

Right?

Wrong.

Sorry, but the market had this implosion Dead Fucking Wrong from The Word Go. Housing started crapping out starting in JULY 2006... and the DJIA didn't top out till OCTOBER 2007!

The market has done an abysmal job at discounting the effects of the complete destruction of about 1/3rd of this countries wealth. And the rest of the World did no better. Of course, NOWHERE is the prediction business WORSE than right here in Bend Oregon.

The Bully STILL maintains that the Sun Will Come Out Tomorrow... despite the fact that the sun has never really gone down. It's all in our heads. Have some Kool-Aid.

No, markets & media have done a disatrous job calling this Great Recession.

But BY GOD they feel 100% CONFIDENT calling it's end. And it's END IS NIGH MOTHERFUCKER!

Yeah, the exact same bitches who could not see this fucker coming a mile away, are confidently calling it OVER in Q3. Q4 at the latest. The Bully, in classic dumbfuck fashion, says that it all ended a year ago April 25, before it even started.

It's ain't over. Not by a mile.

What could possibly go wrong?

First, commercial RE. Commercial RE isn't even close to hitting bottom. Hell, it ain't even to the point of Maximum Decline.

Commercial RE default rates, based on "seasoning".

X-axis is months of seasoning, Y-axis is default rates. That real steep brown line is commercial RE deals done right at the Bubble's top, while the flat dark blue one is deals done years earlier.

Doesn't take a rocket scientist to see that commercial RE, a wealth storehouse rivaled only by residential housing (maybe), has yet to see the other shoe drop.

We're in a vicious deleveraging cycle, and this sort of thing doesn't just "stop". It grinds on and on and on... Look at the Japs: 20 years later and the fuckers are still mired in the World's longest Modern Day Depression. That's what's coming our way.

What's next? The future is plastics...

Credit card default rates ain't the problem, it's the amounts... Graph from LAST YEAR!

You're going to hear It Ain't So Bad Now, Cuz It Was Worse In 1991! Right.

See, in 1991, we only had about $800 bills in CC debt. And we defaulted on 5.3%, or about $42 bill.

Today, we have over $2.6 TRILLION, and we're just getting started on the Default Train.

Look for banks to start folding again on commercial and unsecured (Credit card) debts AGAIN, Green Shoots BE DAMNED.

Finally, we'll see in HIGH RELIEF more of a symbolic failure than anything, this week. Our friend GM itself will die of CARDIAC ARREST.

Same shit, different day: There will be no end to stories of it's RESURRECTION, bigger & BETTER than ever. Nah... AmeriKKKa is still the World's Premier Manufacturing Location!

AMERIKKKHAN WORKER BEST IN WORLD!

"My husband is UAW Proud!"

AmeriKKKHAN workers, namely Union Tubs of Fucking Shit, are the most MINDLESS DUMBFUCKS THE WORLD HAS EVER KNOWN. Read it again, hbm.

Instead of actually realizing they were ass-fucking what used to be the Worlds Largest Company so fucking hard, that it DIED, these butt-wipes will now be equity partners, and own 17.5% of a BANKRUPT BEHEMOTH.

OK, the math: 17.5% of nothing is... NOTHING!

Right, right... New GM, Bigger, Stronger, Faster, we can rebuild him, yada, yada bullshit.

The fact of the matter is GM, Chrysler, Ford, and a shitload of other PROTON-based manufacturers are less relevant than ever. We've got our panties in a wad over the idea that Indians, Japs, Chinese, and Queersbekistanians could own our auto business, putting us on par with Greenland auto production, or some shit.

Fuck that. GM, if brought back to life, will NEVER EVER again be anything but a bit player. Did you hear the "UNITS REQUIRED FOR MINIMUM SAFE DISTANCE" quoted by the auto industry? It was 11 million units! We're doing 9 mill now!

These fuckers need 11 million units to even EAT, and that figure might as well be 10 billion, cuz we'll never hit it.

Ohhhh, GM is going to declare Chap 11. AT LEAST TWICE. This motherfucker is going to be like a Weekend At Bernies. The whole US manufacturing base is slowly going to erode away.

So RE isn't even close to being over. There has yet to be the aftershock of CC defaults. And US manufacturing is just going to die.

What's the "New Normal?".... it's a whole lot skinnier than it was.

I know you love my huge titties, AMERIKKKA!

All Signs Point To Deteriorating Bend Economy

I suppose the Big News of the week is that Oregon Unemployment seemed to "stablize" at 12.0% (adjusted). The unadjusted figure fell to 12.1% from 12.7%, but remember: the "adjusted" figure is the new Quoted Standard.

In 2008, Bend unemployment went from 7.8% in March to 6.6% in April (down 1.2%), while the adjusted stayed at 6.7% for both months.

So we can look forward to a rising "adjusted" unemployment rate even if our "real" rate falls as much as 1.1%.

Only 1 thing is for certain: Local Bend media, while not even acknowledging "unadjusted" unemployment will start touting the FALLING UNEMPLOYMENT rates contain therein, if they do indeed happen.

Watch for it this week: The Last Leading Indicator was MONTHS OF INVENTORY, and it did a pretty damn good job.

Months Inventory stands at 11.7 months for Bend residential.

Bend w/ Acreage stands at just over 5 years inventory.

Who is the LEADER (by LEADER, I mean LOSER)?

Sisters, my favorite PARIAH, has 101 residential homes for sale, and just a single sale in April, for a (fairly transient) pretty terrible 8.4 year supply of homes.

If you think that single sale is a Big Anomaly, Sisters also had a single sale in March as well.

Sisters w/ Acreage has had either zero or 1 sale in each of the first 4 months of this year. Months (Years?) Inventory has ranged from 6 years or so on the low side, to infinity on the high end.

Redmond has a 14.5 month supply of homes, and over 2 1/2 years of acreage properties.

LaPine has 10 months of homes, and just over 32 months of acreage properties.

Crook County has just under 2 years of home supply, and a fairly brutal 14 year supply of acreage property... that's a single sale out of 168 available properties.

Madras has about a year and a half of homes, and 2 years of farms for sale.

So the Leading Indicator of Economic Health for the region is still Very Poor. Damn Poor.

That tells me that the Best Concurrent Indicator, Unemployment, is not going to jump up soon.

At least I don't think.

Because I have a sneaking suspicion that all the Job Seekers are starting to see the Wizard behind The Curtain isn't all he's cracked up to be (Hollern, Smith, Costa). And a lot of people make their forward-looking plans at this time of the year (Brucey).

Many will say "No".

I am seeing a HUGE number of For rent signs sprouting up. I've been here 8 years, and haven't seen this many. Usually they go up, and are down in a week... not so this year.

People are leaving Bend in DROVES and I don't give a shit what anyone else is saying.

I'm SEEING IT.

So here's the Low Down: We may have reached the seasonal low in real unemployment for the season (I thought this last month & was proved wrong), but Inventory is still HUGE. Dark matter is suddenly seeing the light of day. Gray matter is coming out of the woodwork.

But there is no money here to buy it. There's no money because there are no jobs. There are no jobs because we squandered the largest lottery payout this place has ever seen, by distributing the money back to developers via reduced and now eliminated SDC charges, and other perks such as free land distributions (Putnam Pointe).

We might start to reach the Self Healing Point: People leaving having had their Bend Dream Crushed via 401K 100% losses on amenity business black hole, and so the unemployment rate starts to ease because there are fewer job seekers.

Maybe?

---

I hate to keep saying I Told You So (that's a lie), but...

San Fran leads the pack with the largest absolute dollar losses in housing prices, with a crushing loss of $444,800.

It's also 3rd on the depreciation list of Big Cities (over 1 mill population), with a nut-crushing loss of 52.5%

And that's the loss on the MEDIAN home, not the average. The average is probably a lot higher.

I think SanFran is much like Bend, and still has yet to deal with the real repercussions of losing that much net worth.

By my calculations, Bend has lost $13 billion in net worth, from a peak of $24 billion. And the population has actually gone up over this time. So we've individually gotten a lot poorer.

But SanFran has lost several HUNDRED BILLION in net worth.

SanFran won't change as much as Cent OR (we will have it MUCH WORSE), but it will suffer immensely, and the fundamental character of the place will transform over the next 10-20 years.

All these Cut In Half markets, like Bend, SanFran, San Bernnie, Phoenix, Vagas, LA... will all take 15-20 years to recoup the bubble losses.

I don't know about you, but in 20 years I will be an old motherfucker.

My kids will be grown & married. And probably have kids.

Folks, 20 years is a Long Ass Time.

These places won't recover in any relevant time period.

Well, I actually have to get to work, so I'll leave it at that...

hbm, you wanna float the river, big boy?
BendBubble2 makes me wanna take off my shirt!

BB2's a pretty toxic place. I don't go there.

Funny thing happened on the way to April 2009... we became Fairly Valued.

Remember, back last August, when Brucey was still riding atop his Perpetual Filing Machine (Perpetual Flying Machine?), hbm had sworn off BB2 for the 122nd time, which we celebrated as it coincided with his age... and National City had stated that Bend was still tops in overvaluation.

We had $285K medians, which Nat City said was 46% too high.

So... that brings us to $195K medians... which... is... where.... we... are. Back to 2003 levels.

Yup folks, we are no longer exceptional. We are average. Well, sorta.

We are actually far above average in unemployment & the rate of housing price depreciation.

That's the unfortunate part. We're in a Bad Way. 17% unemployment doesn't just vanish. In fact, with Cessna & the Multiplier Effect, we're probably going to lose several thousand jobs from that source alone.

Bend is in Collapse Mode. The Virtuous Circle is now a Vicious Cycle. All will be undone, and then some.

People will soon start making arguments that prices in Bend have reached IRRATIONAL LEVELS. And they will be right, in one regard.

You will be able to buy cheaper than owning.

It really won't make ANY SENSE to rent. But prices will go below that parity. They will because there is no money here. There is unemployment, there is no money, and there are no jobs. And when that happens, price doesn't matter.

Bums can't buy houses.

I think there are some touting that now is an INCREDIBLE time to buy a home in Bend. This is just indicative of someone who has no idea about the repercussions of a Black Swan.

Black Swans don't make sense. Medians are headed towards the low $100's. Buying will be cheaper than renting soon. Believe it.

---

Speaking of crazy old cooters, hbm found a good piece in Business Week about the implosion of Bend.

“It boggles my mind how we’re going to get out of this,” Erik Kancler, executive director of Central Oregon LandWatch, told The Bulletin.

Maybe the only way to get out of it is to follow the example of other Bendites, load up the U-Haul and get the hell out of Dodge.

Funny that hbm & I have what appears to be similar "agendas". Or at least similar conclusions about what people should do if they are down & out in Bend, OR.

We don't see eye-to-wandering-eye on much, but we certainly share the belief that Bend is a crumbling edifice of Greed & Corruption & Crushed Dreams.

And all we hear, is that our beloved City Leaders SAW IT COMING, all along.

Bull shit. None of these dumbfucks saw anything coming.

Go read the Bully archives. Not a single City or Business Leader was predicting ANYTHING except a BRIEF SLOWDOWN, and then off to the races, harder, faster, and HIGHER than ever before.

Everyone "running" Bend wanted you to buy, buy, BUY.

And they believed it. Sawyer & hundreds like her (and him) bought after the top, when we were down just 10%... not the near 50% we are down now.

And still they tell you to buy. Why? It's actually starting to be a "Good Deal".

OK, I'll go along with that. IF, you can pull of positive cash flow from Day 1, and IF you have absolutely NO PLANS of ever selling. THEN, it can work.

But why? It'll work FAR BETTER in 1 year. And FAR, FAR better in 2.

In a couple of years, when all have lost hope, Bend will be a nice little spot for making money. NOT the CAP APP days of yore. But just positive cash flow each month. Regular place, with an OK RE market.

It's getting there, but it's not there yet. We have $195K medians, the rest of the country is $165K, or so. We are STILL too high, and will ultimately go 20-30% below national medians.

---

This crazy fucking blog, attracts your standard garden variety lunatic. And that repels quite a few. Can't stand the heat, I suppose. Saw this over at BendBB:

by popgoesbend on Thu Apr 09, 2009 9:10 am

Marge sometimes posts that info over at BB2...

by Jack_Elliott on Thu Apr 09, 2009 1:35 pm

BB2's a pretty toxic place. I don't go there.

The guy wants info on RE, someone suggests coming here... but WE'RE TOO TOXIC. AHHH! Stay away! You'll catch BB2 Swine Flu AIDS!

Oh geez. I don't think Jack Elliott has heard about the New, Kinder, Gentler BB2, with 1/100th the FUCK YOU IN YOUR SMELLY CUNT factor, now that Buster has curled up in LaPine, and is giving hand-jobs to goats.

Sorry, but I read this sort of thing and realize that this Jack Elliott guy is like Oran Teater in hbm's piece: They will fucking deluded themselves into things at all costs that serve their own purposes.

This place is "toxic"? Really? WTF does that mean? And it's actually true for many on BendBB, they just won't come here. Too rough-N-tumble, too Wild West.

I just think that's sorta funny. If I want info, I will go anywhere on the web to get it. I don't think anywhere is "TOXIC". That's just weird. "TOXIC" is harvesting IP's, and that is done on BendBB, not here. "TOXIC" is moderating & deleting comments... again, not done here. "TOXIC" is having some sort of Trusted Registration process, when no such thing is possible, which is done... well, you get the point.

---

Finally, I figure I will throw hbm, Dunc, and other lib's a bone. I had a chance to watch CNBC over the past week... I do not have cable here at my house.

Ummmmm... when did they become an almost Zombie Force For Repugs?

I last saw that station 10 years ago, and they were relatively neutral. What happened?

They had the odd position of blaming the economic problems on Barack, but somehow saying the huge stock market rally was happening despite all the awful things he was doing.

When did this happen? I see OPB leaning towards the dreadlocks & granola crowd, but this is ridiculous. It was so BLATANT.

I did not watch Fox News, so hold all cat calls of YOU SHOULD WATCH FOX NEWS!

Anyway, I guess I am back to the obvious slanted view of KTVZ, but man.... they don't hold a candle to CNBC. that was just ridiculous.

---

Finally, just a note on Social Costs.

Social Costs are borne by all people, when a small number choose to (usually unilaterally) impose them on everyone else.

I usually illustrate this with littering. I HATE littering. It's SO EASY to avoid, and is just a direct transfer of costs onto everyone. I HATE IT.

But that seems what this country is becoming. SOCIALISM. The costs of a few are imposed on the masses. Very few benefit, but the costs they impose are HUGE.

That's what we are. It is everywhere. We are a nation of Narcissitic Paris Hiltons. Every little thing MUST BE indulged NOW. If we can make $1 while costing society $20, so be it.

I know everyone is reviling the Socialist Movement of Barack, but to me it is less about the $1 being given to the Free Wheelers. It is about the $20 that I, my kids, and my kids kids will have to bear.

Capitalism may not be perfect, but Socialism is a disaster. It's nothing but the masses trying to impose costs on everyone else. In a social context, it's rampant littering with no garbage pickup.

That is where we are headed.

Siyonara Brucey (and Cessna), We Hardly Knew Ye

Well, I have Good News and Bad News:

The Good News is, if you can survive in Bend, you can survive anywhere.

The Bad News is, You Can't Survive In Bend.

Yes, yes. Brucey, like Cessna, most homebuilders, graphic artists, PR freelancers, RE brokers & mortgage bankers and a raft of other amenity business owners cannot survive in Bend.

And, I guess I could say I share tim's sentiment with respect to the passing of Olde Brucey:

tim said...

Bruce, If you were tempted here by the PR, that is indeed a good reason to be mad. I didn't even know Bend was supposed to be special when I moved here.

Of course, I didn't know the paper was lousy, the Realtors were in control, or the local gov't was silly. But my expectations were clearly lower than yours. Good luck to you.

I do like to see people make fun of you, but only because your reactions are so priceless.

Having said that, I like you a lot.

I agree Bruce, you and thousands of others were sold a Bill of Goods. A load of Shit. You were suckered in by the Bend Grifting Machine. And Bend takes no prisoners.

But rest assured Bruce, you're doing the Right Thing. This place is all smoke & mirrors. On a Good Day. On a Bad Day, it's suicides, mob hits, and losing your house & job.

You're catching flak Brucey, cuz I think you walked in like a lot of people declaring, "I'm going to run this shithole in 90 days!"

And then you slowly found out that living in Bend is like living on the Moon. The middle of nowhere, and precious little time left to Get Out after your blood starts to boil...

So I have to give the bad with the good:

tim said...

>>Some of you have to man up.

I hope you're joking when you say that. You, after all, are the poster boy for how much energy can be expended while effecting so little change.

I guess this is more of a life lesson than anything.

1) You talk about Anonymouses, and I understand what you're saying. But this is Bend, dude. Look what all the publicly ID'd commenters got: Bile & Loathing. Even Dunc, who is fairly highly regarded, got his share of ass beatings.

2) Combine #1 with the aforementioned "megolamania" about changing the World, and you're going to get roundly assailed. Anywhere. But on this blog, it will be relentless.

My own philosophy is to NEVER say I'm going to do something publicly, UNLESS it is for precisely the reason of motivating myself to do it knowing I will be lambasted if I do not succeed.

That's what happened here.

But, Dear Brucey, take solace in the fact that you are leaving for a better place. A lot of the cat calls are veiled shrieks of envy. Really. A lot of people are angry that you, someone they have beat on mercilessly, actually has the good sense to leave this imploding shithole.

All these cries of "Good Riddance", are tainted with envy. You can't survive in Bend. And neither can they, and they know it.

It's gotten so bad, Buster has regressed into a fetal ball in La Pine, fantasizing over Malay sex slaves.

No Brucey, you are leaving to a better place. Bend will implode into a firey ball of shit, taking most of us with it.

Bend IS exceptional: Highest 1% unemployment in the land. But we are actually The Top for how fast we got there. Bend has the single largest INCREASE in unemployment in the USA over the past year. Blew away Flint MI, that's for damn sure.

I salute you, Brucey. And wish you well. You WILL have the last laugh. Check in occasionally, while you watch Rome Burn from afar. And believe me, it will burn. Your own example of futilely trying to effect change from outside the Good Old Boy Beltway ensures that. You can't change Bend, and that will be it's downfall.

Really, do check in. Especially when unemployment hits 20%+. And laugh your ass off. This place is tearing itself to pieces, and will catastrophically explode.

Lot of people staying based on the idea that you can rise a souflette twice. Can't. Bend is 100% doomed.

And your example will lead the way Brucey. There is going to be a mass exodus the likes of which has never been seen. This Summer. 1 in 6 unemployed, and getting worse. That can't stand. People yank their kids and move ASAP in places like that.

Come back Brucey, when this place has hit rock-ass bottom, and medians are under $100K, and you can buy you a nice little shit-shack downtown for 100% cash, and live off your royalties. You'll be the last one laughing.

Everyone who decides to stay will be destitute.

You are doing the right thing Brucey, if only a little late. You drank the Kool-Aid, and then saw the Emperor wears no clothes. This place is a 100% grift scam. Nothing is real. How could it be 200 miles from anywhere? Again, it's a moonbase.

Good luck to you Brucey.

---

Cessna Closes

OK, it's hard not to gloat a little on this one. I called this before Cessna even bought the remains of Columbia Air. It seemed clear that Bend Oregon as an assembly point was catatonicly stupid. Moon FUCKING Base. Gat Damn.

We got the obligatory "We knew it was coming" bullshit from every corner, including the founder. Seems EVERYONE KNEW it was coming. No biggie. Uh huh.

That's how EVERY SURPRISE CLOSING is unveiled.

"Yeah, we knew it was coming."

What is left out, as usual, is the Reverse Synergy Angle.

Right? Yeah, the Bully, and every single interviewee (typically Roger Lee), categorically states that when these businesses are on the upswing (like CESSNA WAS IN 2007), that the synergies will spread out throughout the land.

For every hire done by Cessna, there will be 10 new hires by other companies.

600 hires at Cessna? 6,000 teritiary hires elsewhere, and $6 billion in new growth throughout Central Oregon.

Standard Op Procedure. Alana Audette does this daily. $600 bazillion in "tourist" economy dollars spent yearly here.

Audette & Lee are the masters of taking something ridiculously small and multiplying it by 7,000,000,000,000 to make themselves look important.

Funny though, that the same MULTIPLICATION is never unwound on the way down.

Now that Cessna is gone, there will not be an UNWINDING of 6,000 jobs, nor an UNWINDING of the $6 bazilion dollars they brought to our doorstep.

This is Bend. Everything is PR'd to 100X it's size on the way up, but never downsized when it explodes.

Rest assured Central Oregon, those 6,000 teritiary jobs Cessna brought here will NEVER GO AWAY.

---

This is the web that caught our Young Brucey, and THOUSANDS of other just like him.

Lies, and More Gat Damn Lies. Audette & Lee. All funded by our dear City Council & local government.

You are here to be bilked of EVERYTHING. Everything you've ever worked for.

Folks, if you arrived here in the past 5 years, it's time RIGHT NOW, to take a hard look at the facts. Many, MANY of you reading this blog are either UNEMPLOYED, horrifically UNDER-EMPLOYED, or about to be UNEMPLOYED. And if you bought a house, you have lost an average of $1,000/week. And that is not going to stop.

And Summer is coming. And the kids are getting out of school. THIS IS IT. THIS IS GO TIME.

Take a serious hard-nosed look at things.

CAN YOU afford to stay in a place that has NO HOPE of getting a Real Economy? This is a MOON BASE, light years form anything REAL.

CAN YOU afford to lose $1,000/week for the next year? Or even $500/week? This is more than many people make here.

CAN YOU afford to bet it all on your employer surviving a complete collapse of this place?

CAN YOU afford NOT to leave this Summer, and find a place that isn't completely falling apart at the seams?

This place is DOOMED. It is deteriorating at a rate FASTER THAN ANYWHERE IN THE USA. Housing WILL NOT GET BETTER. The JOB MARKET WILL NOT GET BETTER.

Don't believe me? Go talk to ANYONE who used to work for Cessna. Go to the Redmond School District, where they are talking about 4 day school weeks. THAT is on it's way here.

Redmond is just like Brucey; They have simply woke up & smelled the coffee before Bend, and are doing something about the problem.

This place will start hemorhagging people and jobs starting in ONE MONTH. Well, the jobs has already got a good start, people will now follow. Before we had RUMORS of exodus. Folks, at 17% unemployment, not even the mightiest PR efforts this place has to offer will be able to put down THE FACTS. People will leave Bend in DROVES.

There will be huge swaths of empty, decaying STD's ALL OVER. My God, Hollern has marked down Yarrow 80%! And still he won't sell anything...

It's time to MAN UP, and follow Brucey's example. LEAVE. Seriously. If you do not have a job, could get fired at anytime, are barely scrapping by, or own a house and aren't making $3K/week to make up for your losses, LEAVE THIS PLACE. You will not survive.

Bend Oregon: 300 Days of Bullshit Every Year

OK, I'll do a little knick-knack post placeholder to break up the monotony.

1) As I live & fucking breath, it is snowing outside this morning.

April 28, and it's snowing.

OK, I don't want to hear this 300 Days Of Bullshit anymore. Central Oregon has some of the weirdest fucking weather in the World.

When I first got here, I remember getting snowed on near the end of May, on a sunny (but pretty cold) day.

300 days of sunshine a year, is 100% Grade AAA Bullshit.

2) 17% Unemployment.

OK, this motherfucker is taking on a Kevin Bacon ONE degree of separation. Everyone KNOWS someone who is unemployed.

UNEMPLOYED and In The Shit. I know people. I know almost as many who are "employed" but making NOTHING. Not nearly enough to meet their daily expenses.

We have 17% unemployment. And probably 25-30% EXTREME UNDER-EMPLOYMENT.

You can read about how unemployment is hitting home values at the Portland Housing Blog.

3) Yarrow down 75%.

In today's Bully you can see there is a piece titled, "Yarrow now offers ‘twice the land, half the price’".

Follow the link, and you'll see that Yarrow is essentially succumbing to the desert. And since they are MORE THAN cutting price in half, and doubling lots sizes, this approaches something like 80% OFF.

But you will see, this will only move a little property. To Madras locals. And a couple of prison guards new to the area.

No one moves to a place with 20% unemployment, no matter how cheap the housing. It's called "The Burns Manifesto".

4) Case Schiller is out today.

The big 10 & 20 city composites are off about 19% YoY.

I'm starting to think that my Dead Ass Hit Rock Bottom Date estimate of July 2010 might be early. This thing might go to 2011... or 2012.

Which means Bend will stretch out to 2014 till we crater at the nadir.

At sub $100K medians? It is looking more and more possible.

5) High End Homes Crashing in Bend.

My favorite "If I Had a Million Dollars" Bend neighborhoods is Deschutes River Ranch. Very nice, big fancy, schmancy homes overlooking a hay operation. Provincial and snooty as hell.

But click the above link, and go to bendeconomy.informe.com (ANON PROXY ONLY!), and you'll see that DRR has utterly imploded.

The above home haas crashed from $2.4MM to $1.15MM, or just over $200/sf.

DRR was holding the line at around $500/sf all through the implosion, and seemed pretty much immune. I saw Tetherow collapse, and still DRR held.

No more.

6) RE "Economist" gets ass kicked by Oregonian.

In this town of Kool-Aid Fueled "news" reporting, once in awhile it's nice to see a paper call out BULLSHIT on some dumbfuck Pie-In-The-iSky RE tout, who has YET AGAIN, called for the RE bottom:

Real estate life spotty for many in Oregon
by Colin Miner, Special to the Oregonian Friday April 24, 2009, 6:03 AM

At the association's December conference on the market outlook for 2009, Jerry Johnson, a real estate market and regional economic development consultant, predicted that "we have found the bottom" and that the "fundamentals are not likely to get worse."

The next month, things did get worse. According to the Regional Multiple Listing Service, January 2009 saw a 32.5 percent drop in closed sales from the year before. Pending sales dropped 26.1 percent, and the average sale price fell 13.3 percent.

Good one Oregonian. Take a page, Bully.

---

OK, I gotta go to work. I'll try to MAN UP and do an actual post this Sunday.

"I'm so lonely for a Real Newpaper to tell me about Bend RE!"

Bend: The Mass Exodus Has Begun.

Downtown seems to have a grip on Bendites. Everyone thinks that if you have a spot downtown, you can't fail. Despite all evidence to the contrary, despite a sea of failures.

See who's moving in

“It is exactly the same food, same menu and the same staff — it’s just a new location,” said Cheri Helt, co-owner of Zydeco. “We are excited to be a part of downtown.”

“Visitors are absolutely going to come,” La Placa said. “The new downtown restaurants are very promising and positive news for our tourism industry and locals.”

The new restaurants could re-energize downtown, said Carin Cameron, owner of Cork, a fine-dining restaurant on Oregon Avenue that opened in 2001.

Always someone who believes They Are Special. "I'll make it, because I am better than the rest."

Sheeps to slaughter. Thanks Costa. Mission accomplished.

I have to mention again, one of the Bubbleliscious Busts of the week: Mountain Comfort.

Any idiot should have seen this coming. But as I am often told, I am not any idiot.

Mountain Comfort was one of those things that just had no exposure to any other time, except the Best of Times. They were never exposed to anything except a parabolic economy.

Things didn't just go well, while Mountain Comfort was alive, they were meteoric.

And there are so many places like that in Bend. All the lost restaurants, Merenda, deep, Bluefish, et al. But it goes far beyond that.

All the Cook-It-Yourself franchises. 75% of the area homebuilders. Most of the RE industry infrastructure. The Big Box retailers. Auto row.

It was really most of Bend. I know there are some long timers. Like the Porsche dealer.

They were here forever before the Boom. Then the Boom. Then they remade themselves in the image of the Boom. Same with the Mercedes dealer.

Same with almost everyone. Except maybe Dunc.

Everybody bought it.

You don't have to buy the boom to own it. You just have to "refi".

You just have to alter your plans for bigger & better things. Like Mountain Comfort.

They threw millions into their facility during the parabola. They didn't build, they just refi'd up.

Everyone looks at who built, but the refier's built as well.

There was huge capacity added by entrants, but there were a huge percentage that just traded up, or they feared they'd be left behind.

Look around. This whole town traded up. It's FULL of Mountain Comforts.

---

I found the Job Loss on Slate chart Dunc mentioned.

Very cool, and illustrates the heinous & sudden change in this countries economy. Millions of jobs have been lost.

And we found out that Oregon has taken it's rightful place on the economic extremes.

Odd dynamic propels Oregon jobless rate to No. 2

Layoffs alone don't account for Oregon's dubious distinction as the state with the nation's second highest jobless rate behind Michigan.

Instead of giving up or leaving, as they're doing in every other high-unemployment state, more people in Oregon are seeking work. Retirees, nonworking spouses and others are job-hunting alongside laid-off workers, together driving the state's unemployment rate in March to a 12.1 percent historic high.

Oregon business news has become a daily drumbeat of layoffs and bankruptcies, yet it's difficult even for experts to fathom how joblessness here could approach levels of Michigan, a state devastated by the auto industry's meltdown. Michigan, with 12.6 percent unemployment in March, sees its labor force shrink as job seekers give up and as laid-off workers move away.

Economists can't entirely explain why Oregon bucks the same trend of worker-exodus in Nevada, California, Indiana and the Carolinas.

"I'm left scratching my head about why is that labor-force growth going up," says Tom Potiowsky, Oregon government's chief economist. "Are we going to see that level off? That's my expectation."

Potiowsky also expects Oregon's seasonally adjusted unemployment rate to keep climbing, perhaps even overtaking Michigan to become worst in the nation. Oregon's rate rose in March by 1.4 percentage points, the nation's largest increase that month, the U.S. Bureau of Labor Statistics reported Friday.

Fifty-eight thousand more Oregonians entered the labor force during the year ending in March. The state lost 77,000 jobs during the same period. The 3 percent labor-force increase combined with a 4.2 percent employment decrease to produce the jobless rate equaled only once before, in November 1982.

In-migration accounted for less than 1.2 percent growth in Oregon's labor force, meaning most of the new entrants to the labor force were current residents. Michigan, by contrast, is suffering a brain drain as skilled, unemployed workers bail out.

"In some cases they've decided to move where they like to vacation," says Patrick Anderson, of Anderson Economic Group in East Lansing, Mich. "Oregon might be one of the beneficiaries."

Some Michigan citizens have lost hope, Anderson says, due to the auto industry's decline, the state's fiscal troubles and statements by former President George W. Bush and President Barack Obama that, he feels, have devastated consumer confidence in U.S.-made vehicles. Anderson predicts Michigan's jobless rate will rise higher.

"The president has essentially put Chrysler on a 30-day deathwatch that's going to cause a string of bankruptcies across the entire country, including Oregon," says Anderson, who expects many U.S. car dealerships to fold.

The recession is hitting the West especially hard, pushing regional unemployment to 9.8 percent in March, compared with 9 percent in the Midwest. The national jobless rate was 8.5 percent.

Oregon has lost major employers recently such as Monaco Coach and Joe's Sports, Outdoors & More. Managers of SpectraWatt, an Intel spinoff founded in Oregon to make solar cells, found superior government incentives in New York. Other big Oregon employers are cutting pay and laying off workers.

Instead of getting discouraged, however, many Oregonians are writing resumes. More Oregon college graduates are staying in state to job hunt.

"Generally when you get these economic downturns, you would expect people to exit the labor force, not enter it," says Tim Duy, a University of Oregon economist. He suspects out-of-state retirees who moved to Bend and elsewhere in recent years could be partly responsible.

"Maybe it's because we attracted so many equity refugees," Duy says, "people that sold their homes in California for some ridiculous amount of money and moved to Oregon expecting to never have to work again."

One solution, says Duy, who admits it's harsh: a free one-way bus ticket out of state, for anyone who wants one.

This is just classic. What created prosperity on the way up, is now strangling us on the way down: Cali-Bangers.

People who flocked here with equity, traded up paying half down, a HUGE cushion, never going to work another day in their lives.

Until houses got cut in half.

Now they all need to work again.

Duy says give them free bus tickets OUT OF TOWN. COVA is paying millions to get them to come.

A House Divided.

Oregon will break your heart. Bend will give you the fucking AIDS.

---

We've had a nice little reprieve from the downward onslaught of late. In fact, we've had the best 6 week run in the markets since 1938.

But don't get comfy. The tax refunds will soon be spent, the stimulus dollars will be revealed as just another AIG boondoggle, and Oh Yes... the foreclosure moratorium is coming to a halt:

US Foreclosure Filings Jump as Moratoriums End
REAL ESTATE, MORTGAGES, ECONOMY, FORECLOSURES
Reuters
16 Apr 2009 | 05:09 AM ET

U.S. foreclosure activity leaped 46 percent in March from a year earlier, hitting a record high as programs stunting the torrid pace of failing mortgages expired, RealtyTrac reported on Thursday.

A temporary freeze on foreclosures by major banks and government-controlled home finance companies Fannie Mae and Freddie Mac ended before President Barack Obama's massive housing stimulus, unveiled on March 6, could take root.

Filings, which include notice of default, auction sale or bank repossession, jumped 17 percent in March from February. Filings for the quarter also marked a record high, jumping 24 percent from the same period a year ago.

The March and first-quarter totals were the highest since RealtyTrac began tracking them in January 2005, even as bank repossessions declined. One in every 159 U.S. households with mortgages got a foreclosure filing in the first three months of this year, RealtyTrac said.

Filings were reported on more than 803,000 properties in the quarter. California, Florida, Arizona, Nevada and Illinois accounted for nearly 60 percent of U.S. foreclosure activity in the first quarter, with a combined 479,516 properties receiving filings.

In the transition from industry freeze to new government rescues, the foreclosure filing floodgates reopened. After the moratoriums ceased, "we saw an onslaught of notices of default, which is the first stage of foreclosure," Rick Sharga, senior vice president at RealtyTrac, said in an interview.

The rise in filings suggests a backlog had built up due to the moratoriums. The success of the Obama mortgage bailout may not be seen until the autumn, Sharga added. Activity should peak near year-end. "

But unfortunately, these well-intentioned delays in the processing might have the unintended consequence of extending the housing downturn," and further dragging down home prices, he said. "We still anticipate that we'll see upward of 3 million households receive a foreclosure notice this year, up from 2.4 million last year," Sharga said.

For all of 2005, the last year before the foreclosure spike started in earnest, RealtyTrac reported about 800,000 filings. Loan servicers are overwhelmed with the volume of failing home loans and many are understaffed to handle modifications.

One national servicer that foreclosed on 2,000 properties in 2006 handled about 21,000 the next year with similar staffing levels, Sharga said. The servicer expects a 50 percent spike in 2008, without approval to increase staff.

Unemployment May Trump Bargain Hunting

Nevada, Arizona and California had the highest foreclosure rates in the first quarter. Homes prices and sales soared in these states during the boom years earlier this decade, and now suffer the biggest losses on overbuilding and abandoned investment units.

Nevada led the ranks in the quarter, with one of every 27 households with loans getting a filing, more than five times the national average.

Everyday I hear people who are deciding to Walk Away and Not Pay. U-Haul is the only growth industry I see.

And you watch, the Mass Exodus of Bend is about to go into high gear. School's over, and I'll wager we are going to see the first innings of an outmigration the likes of which this place has never seen.

You can have 16%+ unemployment and not hemorrhage population. Crook & Jeff counties will be even worse.

They'll start talking about a rebound soon, but nature hates a vacuum, and homes will rush in to fill the void. The plummet in Bend prices will continue unabated.

But even so, now is basically the only time you can sell. And you have to want to sell.

Realtors are finally waking up to the New Reality, and that reality doesn't involve overpriced listings that sap their valuable resources.

You need to wake up & realize that if you bought in the past 5 years, you will lose.

If you bought in the 5 years preceding that, you might do little better than break even.

If you bought before that, simply realize that your gains will be muted, not astronomic like you thought they'd be 3 years ago.

That's the New Bend. A place where dreams are crushed.

---

Finally I want to go out with a little excerpt from The Economist.

One of heresy-ridden ideas I put out about 18 months ago was that home-ownership (The American Dream) would become the AmeriKKKan Nightmare.

People would actually look down on home ownership. Home owners would be seen as The Inferior Race. Not Renters.

Renters are just losing their monthly payment. Owners are losing everything.

Shelter, or burden?
Apr 16th 2009

The social benefits of home ownership look more modest than they did and the economic costs much higher

IN A scene from the film “It’s a Wonderful Life”, a happy couple is about to enter their new home. Jimmy Stewart, whose firm has sold them the mortgage, reflects that there is “a fundamental urge…for a man to have his own roof, walls and fireplace.” He offers them bread, salt and wine so “joy and prosperity may reign for ever”. That embodies the Anglo-Saxon world’s attitude to home ownership. Owning your own roof, walls and fireplace, it is thought, is good for householders because it helps them accumulate wealth. It is good for the economy because it encourages people to save.

And it is good for society because homeowners invest more in their neighbourhoods, engage more in civic activities and encourage their children to do better at school than do renters. Home ownership, in short, benefits everyone—not just the homeowner—and the more there is of it, the better.

Which is why it is usually encouraged by the government. In America, Ireland and Spain, homeowners can deduct mortgage-interest payments from taxable income. Yet the worldwide crash was bound up in this supposed miracle of social policy.

The disaster began with defaults on American subprime mortgages, a financial instrument designed to spread home ownership among the poor.

It gathered pace after the failures of Fannie Mae and Freddie Mac, two government-sponsored enterprises that provide cheap home loans. As a result, the home-ownership rate in America has fallen for four years, the first time that has happened in a quarter of a century.

In 2008, 2.3m families lost their homes or faced foreclosure—double the average before the crisis—reducing the home-ownership rate from 69% in 2004 to 67.5% at the end of 2008. The number of owner-occupied dwellings also slipped in Britain in 2007-08 for the first time since the 1950s.

Subsidised castles

So attempts to expand home ownership have contributed to the wider economic crisis without succeeding in their own terms. How does that affect the arguments for supporting home ownership? Should it still be deemed a public good?

No, say several economists and commentators. “Given the way US policy favours owning over renting,” writes Paul Krugman, 2008’s Nobel laureate in economics, “you can make a good case that America already has too many homeowners.” Edward Glaeser, an economist at Harvard University, talks about “the madness of encouraging Americans to bet everything on housing”.

So far, policymakers are unmoved. In mid-February Barack Obama proposed a $275 billion plan to support America’s housing market. Outside the Anglo-Saxon world Nicolas Sarkozy, who campaigned for the presidency to turn France into a property-owning democracy, has expanded zero-interest housing loans for the poor.

The main economic argument for home ownership is that, in the words of Thomas Shapiro of Brandeis University, “it is by far the single most important way families accumulate wealth”. This argument now looks as weak as house prices. In Britain prices have fallen 21% since their peak in October 2007. Prices in America have fallen more slowly but further, down 30% since their peak in mid-2006 (see chart 1).

This has reduced the total value of the country’s housing stock from over $22 trillion in 2007 to $19 trillion at the end of 2008. In the past few weeks, housing markets on both sides of the Atlantic have seen signs of life, but there is every chance that prices have further to fall before they finally reach their low.

The collapse in house prices matters most directly to two overlapping groups: those who bought property at the peak of the market and now face “negative equity”; and those (in America) who took out subprime mortgages.

Roughly 10m Americans are in negative equity—ie, the cost of their mortgage exceeds the value of their home. In Britain about 3% of households are in negative equity. For homeowners, negative equity makes houses more like a trap than a piggy bank.

Those who cannot meet their payments lose their house, their savings and (in America, usually) their credit rating for seven years. The other area of concentrated distress is subprime mortgages, which increased their share of the American mortgage market from 7% in 2001 to over 20% in 2006.

According to the Mortgage Bankers Association, the delinquency rate was 22% in the fourth quarter of 2008, compared with only 5% for prime loans. Many people have concluded that, in Mr Krugman’s words, “home ownership isn’t for everyone.” However, a study by the Centre for Community Capital, part of the University of North Carolina, Chapel Hill, casts some doubt on that conclusion.

It compared a group of people who took out subprime loans with a group of borrowers from the Community Advantage Programme (CAP), a government-backed scheme that lends to the sort of people who might have had a subprime mortgage. The default rate for CAP borrowers was only a quarter what it was for subprime mortgage holders, even though the incomes and backgrounds of borrowers were similar.

Since the real problem lay partly in the mortgages, rather than the borrowers, this suggests the subprime crisis was a financial-market mess, as well as a housing one. Does that also imply that home ownership has the economic benefits that its proponents claim? Two pieces of evidence seem to support such a view.

The first is that housing has fared better in the crisis than other assets. Share prices are around 50% below their peaks in many countries, so compared with shareowners, homeowners have not done badly. However, home ownership in a downturn has one big disadvantage: most people buy shares outright but homes on margin (ie, they put down a small stake, if anything).

If share prices fall by 10%, you lose 10%; if house prices fall by 10%, you may lose your entire savings. The value of American homeowners’ equity in their own houses has slumped from a peak of $12.5 trillion in 2005 to just $8.5 trillion at the end of 2008. This undermines one claim that homeowning is economically beneficial. The other piece of evidence for home ownership’s benefits is that the house-price fall has so far spared most existing homeowners from absolute losses.

In America, for example, house prices have fallen back only to where they were in 2004. There were roughly 29m house sales in the United States between 2004 and 2007, compared with 115m households, and anyone who bought before then is probably sitting on a nominal profit.

However, as Harvard University’s Martin Feldstein points out, if house prices rise, people feel richer and borrow and spend more. If they feel poorer, they may cut back even if the price of their house has not fallen below what they paid for it. Subsidies to home ownership have thus increased economic volatility.

They boosted consumption, as homeowners used their houses as collateral to finance consumption or investment. In America mortgage-equity withdrawals reached $9 trillion between 1997 and 2006—equal to more than 90% of disposable income in 2006. This gave homeowners more to spend in the good times but less in bad ones. In Britain home-equity withdrawals added the equivalent of 3% of post-tax income to households in the fourth quarter of 2007 but subtracted 3% a year later.

So changes to house prices aggravate the economic cycle. Recent research by the IMF finds that a quarter of the 100-odd recessions since 1960 have been associated with house-price busts and that these contractions “are deeper and last longer than other recessions do”. Subsidies to home ownership have also weakened financial services.

They encouraged more people to buy houses (which was the point), but, logically enough, also encouraged lenders to take greater risks with housing. This was fine while house prices were rising, but the fall exposed how vulnerable banks’ balance sheets had become. Moreover, if public policy aims to create wealth, there are other ways of doing it.

People could invest their savings in the stockmarket and rent their homes, for example. Had they done so in the past two years, they would have done worse than homeowners. But for three decades before that, equity prices easily outstripped property prices (see chart 2), so in the long run equities have been a better bet than houses. (Admittedly, this strips out the effects of share dividends and imputed rents, which favour property.)

Housing suffers from two further weaknesses as an investment. It sucks up disproportionately large amounts of money, falling foul of the idea that investors should diversify: in America the equity tied up in houses accounts for 45% of the net worth of the average householder.

And it is illiquid. If you need to raise money, you cannot sell a room or two, whereas you can always sell a few shares. It is hard to argue houses are the best asset for building wealth. “Perhaps the most compelling argument for housing as a means of wealth accumulation”, argues Richard Green of the University of Southern California, “is that it gives households a default mechanism for savings.”

Because people have to pay off a mortgage, they increase their home equity and save more than they otherwise would. This is indeed a strong argument: social-science research finds that people save more if they do so automatically rather than having to choose to set something aside every month.

Yet there are other ways to create “default savings”, such as companies offering automatic deductions to retirement plans. In any case, some of the financial snake oil peddled at the height of the housing bubble was bad for saving.

Subprime, interest-only and other kinds of mortgage instruments allowed people to buy their homes without a down-payment and without building up equity. “Negative amortisation” (neg-am) mortgages even let people pay only part of their interest each month and to add the rest to the principal, increasing their debt, not their savings. Home-equity loans had the same effect.

Where the heart is

The main arguments for home ownership, though, are not primarily economic, but social. Home ownership, argue those who want to expand it, benefits society because it encourages stable, more law-abiding communities; it makes people more likely to vote in local elections and join clubs; and it benefits future generations because, it turns out, the children of homeowners do better at school and have fewer behavioural problems than children of renters.

On the face of it, the evidence for these claims is strong. In America homeowners are less likely to move than renters, so areas with a lot of homeowners are more stable. According to the 2007 American Housing Survey, homeowners stay where they are for about nine years whereas renters move every two.

More stable neighbourhoods are more law-abiding. According to a study of New York City, the home-ownership rate was second only to income as an explanation for different crime rates.

The link between ownership and political participation is stronger still. In America in the early 1990s, 69% of homeowners voted, compared with only 44% of renters. Homeowners are more likely to know who their representatives are; more likely to support local causes or parent-teacher associations and (this being America) more likely to go to church.

Perhaps the most surprising link is between ownership and children. One study in America found that, in 2000, the mathematics scores of the children of homeowners were 9% higher than those of renters’ children; reading levels were 7% higher.

This had nothing to do with income: the research controlled for that. In another study homeowners’ children were 25% more likely to graduate from high school and more than twice as likely to go to university. Their teenage daughters were also less likely to become pregnant.

These studies, though, are not the last word. They find a link between children’s education and homeowning. But is this because, as some suggest, home ownership requires parents to possess managerial or financial skills that they pass on to their children? Or is it because the people with those skills help their children at school and also buy houses? No one knows.

Nor is it certain that owners always take better care of their neighbourhoods than renters do. Some studies claim that the effect in fact depends on a few public-spirited people willing to set an example. Renters can be public-spirited too. In America areas with lots of renters tend to be transient because the typical rental period is short.

In Germany, though, people rent for years. Stable neighbourhoods and widespread home ownership can go together but do not need to. As Bill Rohe of the University of North Carolina, Chapel Hill puts it, “evidence regarding the societal benefits of home ownership is highly conjectural.” Still, on balance, home ownership gives people a stake in the state of their surroundings.

Thriving streets increase the value of properties, giving owners incentives to improve them further. Renters get no such benefit; they may even have to pay more if the neighbourhood improves. Whether stability is such a good thing in a downturn, though, is a different matter.

A decade ago Andrew Oswald of Warwick University argued that owning your own home makes you more reluctant to move, so labour markets tend to become more rigid as home ownership increases. He claimed that increases in the level of home ownership (though not necessarily the level itself) are associated with rises in unemployment. Ireland, Greece and Spain all saw large increases in home ownership in the 1980s and 1990s, and had relatively high unemployment.

America and Switzerland had stable ownership rates, and escaped the long-term rise in joblessness. His argument remains controversial. Critics point out that many things other than home ownership might prevent people from moving (children’s schools, friends and so on).

Anyway, liquid housing markets should make it possible for people to move, if they want to. It is also possible that, even if people were trapped in distressed areas, jobs should move there to take advantage of the willingness of homeowners to accept lower wages. All that said, Mr Oswald’s arguments seem especially powerful at the moment.

The recession in America is bearing down most heavily on two groups of states: Florida, California and Nevada, which had the largest house-building booms in the 1990s; and Michigan, New Hampshire, Delaware, West Virginia and Mississippi, which have the highest home-ownership rates.

People are not, in fact, moving as frequently as they used to: the share of those moving house in 2007-08—11.9% of the population—was the lowest since records began. So labour markets look less flexible than they were.

Negative equity exacerbates immobility because people are reluctant to move if it means selling at a loss. Researchers at the Wharton School reckon that people in negative equity are only half as likely to move as those who are not.

In all these ways, high home ownership may prolong and deepen a recession. The problem remains of how to weigh the economic costs against the social benefits of home ownership.

There can be no easy judgment about this but the recent rise and fall of house prices suggests both that the costs are greater and the benefits smaller than once thought. If owning were such a boon, you would expect neighbourhoods with lots of owners to have done better than those with lots of renters during the boom years.

That does not seem to have happened. What has happened, though, is that above a certain level, foreclosures have done a lot of damage during the bad years. Recent studies of New York and Cleveland find that, if lenders foreclose on 3-4% of properties in an area, local prices fall even faster and further than average. Rows of For Sale signs almost certainly have the same effect in Britain.

In other words, ownership can sometimes be worse for a neighbourhood than renting. A shelter—for your money Lastly, and perversely, the decade of obsession with expanding home ownership may actually have reduced neighbourhood stability.

Nicolas Retsinas, the director of the Joint Centre for Housing Studies at Harvard University, suggests that, until the crash in 2008, Americans were coming to see their homes as financial investments rather than as places to live.

That is true in other countries. Neg-am mortgages in America and buy-to-rent arrangements in Britain were based on the assumption that houses were primarily investments. As a result, people seem to have started to buy and sell homes more frequently.

Between the mid-1990s and mid-2000s, the number of new houses sold almost doubled in America, from just over 600,000 to over 1.2m in 2006. Perhaps that made labour markets more mobile, but it was certainly not what policymakers were aiming for when they set out to increase home ownership.

Their efforts in the past few years seem to have weakened, though not destroyed, the best arguments for treating home ownership as something to be encouraged: that it increases people’s savings and creates better neighbourhoods for everyone. But perhaps you should not be surprised by that.

As Adam Smith wrote in “The Wealth of Nations” two centuries ago, “a dwelling-house, as such, contributes nothing to the revenue of its inhabitants.”

You watch. Bend, and the USA in general, is becoming a serfdom. A smaller & smaller number of owners.

Great for those miniscule numbers on top, and a nightmare for the rest. No middle class. Just serf's working to pay debts, forever.

The bounce is temporary. We'll find out, just like GM, that the debts are coming due. Again. And put as many debt reprieves in the pipe as you want, they will simply come due again, and again.

This town is 100% doomed. If you trade up to downtown, you will fail. The Financial Black Plague is here.

Save, don't spend. List your house today for 30% less than you think it's worth. Or better, what your hungry Realtor thinks it's worth. I said this 1 year ago, and no one believed it.

Well, here we are. Again. It'll be even worse next year. 16%+ unemployment ensures that there will soon be NO ONE left to buy homes here at the end of this Summer. NO ONE.

"It's tough out there... time to tighten my belt!"

Momma Be MILFin!

Made & Installed In Bend Oregon!

Dear Fellow Wage Slaves

Good Day Fellow RE Nutjobs,

I have managed to keep alive my 100% unblemished sterling record of wanting to pay my taxes on Feb 1, but not actually doing so until April 15.

So here I am, again, with a bowl of chocolate pudding in my financial underpants.

OK, so I am going to pay my F#$%*(&%$ing taxes today, and probably plotz out a empty-husk of a post when I'm done. It might be Wed before I get there.

Otherwise dear friends, please feel free to ridicule me and revile my lack of planning. Again.

Sincerely,

I Hate To Baste Your Butterball.

Is my W-2 down there?

A House Divided

On June 16, 1858, more than 1,000 Republican delegates met in the Springfield, Illinois, statehouse for the Republican State Convention.

At 5 p.m. they chose Abraham Lincoln as their candidate for the U.S. Senate, running against Democrat Stephen A. Douglas.

At 8 p.m. Lincoln delivered this address to his Republican colleagues in the Hall of Representatives. The title comes from a sentence in the speech's introduction, "A house divided against itself cannot stand," which paraphrases a statement by Jesus in the New Testament.

Even Lincoln's friends believed the speech was too radical for the occasion.

His law partner, William H. Herndon, thought that Lincoln was morally courageous but politically incorrect.

Herndon said Lincoln told him he was looking for a universally known figure of speech that would rouse people to the peril of the times.

Another lawyer, Leonard Swett, said the speech defeated Lincoln in the Senate campaign. In 1866 he wrote to Herndon complaining, "Nothing could have been more unfortunate or inappropriate; it was saying first the wrong thing, yet he saw it was an abstract truth, but standing by the speech would ultimately find him in the right place."

Mr. President and Gentlemen of the Convention.

If we could first know where we are, and whither we are tending, we could then better judge what to do, and how to do it.

We are now far into the fifth year, since a policy was initiated, with the avowed object, and confident promise, of putting an end to slavery agitation.

Under the operation of that policy, that agitation has not only, not ceased, but has constantly augmented.

In my opinion, it will not cease, until a crisis shall have been reached, and passed. "A house divided against itself cannot stand."

I believe this government cannot endure, permanently half slave and half free.

I do not expect the Union to be dissolved -- I do not expect the house to fall -- but I do expect it will cease to be divided.

It will become all one thing or all the other.

Good Old Abe Lincoln. Smart bastard.

And, as usual, what is old is new again.

So what is this "house divided" crap? Well, it's us.

It's the U.S. Government & private industry, becoming intermingled at a startling rate.

So what's the big deal? The auto industry is imploding on itself. Everyone, government & auto makers alike want it to survive. Right?

Well, not really. Government doesn't want to lose the jobs. Specifically, the Dem's don't want to lose the Union votes. You lose the jobs, you lose the votes.

So they are shoveling money to the auto makers as fast as possible.

But strangely, the auto makers just aren't doing their part fast enough.

The entities being bailed out are still failing. Only vacuous idiots thought there would truly be another outcome.

GM & Chrysler face bankruptcy. Soon. Sooner than that.

Why? They are getting BILLIONS thrown at them. The leadership (auto & Union, alike) has to want to keep their perk-laden jobs, G5's & bimbo junket's, right?

Do you see why this is a House Divided?

The government wants survival.

Survival requires sacrifice.

Sacrifice is exactly what both sides do not want.

Sacrifice means plant closures, cuts & lost jobs. And neither the government, not the auto maker top brass, nor the union rank & file or leaders want that.

No one can possibly get what they want out of the auto bailout. The cure is exactly the poison that is killing the beast.

Bailout Nation U.S.A. can do nothing but fail. It is a House Divided. It will fall.

OK, on to truly terrible news....

Jobless rate bolts to 8.5 percent, 663,000 jobs lost

WASHINGTON -- The nation's unemployment rate jumped to 8.5 percent in March, the highest since late 1983, as a wide swath of employers eliminated 663,000 jobs.

It's fresh evidence of the toll the recession has inflicted on America's workers, and economists say there's no relief in sight.
If part-time and discouraged workers are factored in, the unemployment rate would have been 15.6 percent in March, the highest on records dating to 1994, according to Labor Department data released Friday.

The average work week in March dropped to 33.2 hours, a new record low. Since the recession began in December 2007, the economy has lost a net total of 5.1 million jobs, with almost two-thirds of the losses occurring in the last five months.

"It's an ugly report and April is going to be equally as bad," predicted Mark Zandi, chief economist at Moody's Economy.com.

First, it bears mentioning again, that all jobless rates are wildly understated. There are all sorts of exclusions that reduce the number of "unemployed" persons in this country.

You can see it here, stated quite literally: The real unemployment figures are easily double what we are told.

We already know that Bend's stated 12.6% is actually 16.1%. And that 16.1% is already massaged as well, so the real rate is closer to 25%.

It's safe to say that the real unemployment rate in Bend is just about double what The Bully reports. Possibly more.

Even that 8.5% rate for the US is bogus. It was 8.9% in Feb. It is impossible to really know, because this is Kool-Aid bailout Nation, and it seems Job 1 is assuaging the population with lies, money & big boobs.

But despite all this lying, within the paradigm of the lies, you can see things are getting grim.

Worst Jobs Recession since the Great Depression

This is a chart from Last Month!

Things are still going from Bad to Worse. The markets are discounting the idea that this "recession" will be worse than others recently, but that things will soon turn.

Wrong.

There has been a fundamental shift in almost everything in our government & our "free" economy.

They are slowly evolving into some sort of unified blob, taking the worst of both, and making a monster.

Remember when Daimler Benz (the beautiful fairy princess) joined with Chrysler (the frog)?

Right. You got a monster.

I'm not telling people this to scare them, or anything else. It's just a warning, the same warning I've been giving almost every single day for 2 1/2 years:

We face financial Armageddon, as a country. Prepare.

This isn't going to be like the Last Time (2001), or the time before that (1991, etc). This is The Big One.

You should need look no farther than last weeks chart of Bend's unemployment, or the chart above of lost jobs. Things are still getting worse, not better.

OK, moving on....

OK, here's a shocking revelation:

Most of the "help" (financial assistance) that banks are supposed to give struggling homeowners (with OUR MONEY), is just hollow gestures.

What a surprise.

Loan modifications rise; many don't pare payments
by The Associated Press
Friday April 03, 2009, 8:55 AM

WASHINGTON -- Though lenders are boosting their attempts to curb record-high home foreclosures, fewer than half of loan modifications made at the end of last year actually reduced borrowers' payments by more than 10 percent, data released today show.

The report, based on an analysis of nearly 35 million loans worth more than $6 trillion, was published by the federal Office of the Comptroller of the Currency and the Office of Thrift Supervision.

It provides the most detailed and broad analysis to date of efforts to stem the foreclosure crisis, which President Barack Obama is trying to combat with a $75 billion plan to promote loan modifications.

The report helps explain why many loans are falling back into default after being modified. Many borrowers and consumer groups contend that the modifications offered by the lending industry aren't very generous, despite more than a year of public prodding from regulators.

For instance, nearly one in four loan modifications in the fourth quarter actually resulted in increased monthly payments.

That situation can happen when lenders add fees or past-due interest to a loan and spread those payments out over the 30- or 40-year period.

Perhaps unsurprisingly, the report found that loans were far less likely to fall back into default if a borrower's monthly payment is reduced by a healthy amount.

Nine months after modification, about 26 percent of loans in which payments had dropped by 10 percent or more had fallen back into default. That compares with about half of loans in which the payment was unchanged or increased.

Loan mod's are simply an attempt to perpetuate past over-consumption mistakes.

You consumed too much house, you can't afford it, but our new US Government-Banking behemoth wants you to pay and pay and pay, until you are beyond tapped out.

This is serfdom. You are a slave to property. You will spend a lifetime servicing your debt.

There is an incredible re-distribution of wealth happening. And it is not to the Top 50% (Whitey), or even the Top 5% (Buster), or even the Top 1%.

It's the Top 0.0001%. It's not people who have a million bucks. It's people who make a million bucks. Per month.

These people are having the full faith & credit of the US (that's us, our kids, and grandkids, et al), printed up & deposited in their bank accounts.

They caused this. Now they are reaping the biggest financial bonanza the World has ever known.

We'll be a country of vast serfdom with an almost impossibly small number of financial Masters ruling the place.

Loan mod's are nothing but an attempt to enslave you.

OK, next....

And just more proof that nearly all the goodness of this blog is in the comments...

Trends Signal Slowing Population Growth In Bend

For years, Bend has been the fastest growing city in the state -- and one of the fastest-growing in the country.

But in the recession, that development and growth has turned into a high number of foreclosures and job losses.

Now, a series of statistics have begun to trickle out that signal many people are leaving the region to find a better life elsewhere.

I'm not sure how many people read this blog (not really important, I guess), but it's little nugg's like this that I just love.

Because it is something Bend's local media would never run.

At Bend High School, the hallways remain crowded. But, a little less so than in the past few years.

The front office says the school has about 100 fewer students than this time last year.

The trend holds true at the district level as well.

There are about 250 fewer students in the system today, than one year ago, a drop of more than 1%.

Ron Wilkinson is the superintendent of the Bend-La Pine School District.

Ron Wilkinson: “Without any question, Bend is in a situation of flattened growth. And when you’ve been on this pattern of almost straight-up growth on the charts, it feels like a significant decline.”

Ron Wilkinson: “For us, it’s a matter that a lot of that construction industry is unemployed or has moved elsewhere. It’s certainly impacted the economy and the entire community.”

Ah yes. The old Flattened Growth. A classic Bendism. It now joins other classic Bend-oxymorons, "larger half", "rolling stop", and "only choice".

Flattened growth. This is Bend.

Finally, another priceless nugg from the comments (Sub req'd).

Cascade Bancorp asks shareholder to invest $25M
By Andrew Moore / The Bulletin

Published: April 04. 2009 4:00AM PST

Cascade Bancorp, the publicly traded parent company of the Bank of the Cascades, is seeking a $25 million investment from David Bolger, its largest single shareholder, that could potentially give Bolger ownership of more than 50 percent of the company, according to a filing Thursday with the Securities and Exchange Commission.

Bolger, of New Jersey, currently owns 21.33 percent of the company’s common stock, according to the company.

Bolger was the lone shareholder of Boise, Idaho-based Farmers & Merchants State Bank, which Cascade Bancorp bought in 2006.

Patty Moss has been reduced to begging!

She wants this Bolger guy, who has probably lost untold tens (hundreds?) of millions, to throw good money after bad.

I'm not sure how this will work out, but my guess is that we'll see an Obombifying of Moss similar to GM's ex-CEO Wagoner: Moss will be caput, with some ridiculous Golden Shower Parachute to keep her ugly lesbian ass happy at night.

Bolger will go for it, if MossCo is ejected. Could happen.

My own opinion is that he should just mentally walk away, not throw good money after bad, and try to get Moss blown out anyway.

Finally, just random nugg's to boggle the mind:

Financial Rescue Nears GDP as Pledges Top $12.8 Trillion

By Mark Pittman and Bob Ivry

March 31 (Bloomberg) -- The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.

"Hey kids, here's why I can't send you to college! And you won't send your kids either! Bailout nation 2009!"

Yet another House Divided piece:

Finding the upside of the homes market

Government trying to make mortgages easily available while preventing foreclosures

Oy. This is what got us into this mess. Increasing mortgage availability simply increases defaults. We KNOW that now. Increase mortgage availability beyond a certain point, and you simply invite foreclosures. That's what is happening now.

Home Prices: Low, But Still No Bargain
Forget low mortgage rates and the buyer's market. Real-estate prices still have a long way to fall.

Homeowners are watching anxiously for any signs of housing market stabilization. So, too, are all those who believe the market may hold the key to the economy.

And yet the most recent data makes for more gloomy reading.

The closely watched Case-Shiller index, which tracks prices across twenty major cities, shows that through January the crash was getting worse, not better.

And yet, even after these declines, homes overall still may not be that cheap relative to wages. More on that later.

The headline numbers are grim enough. January's Case-Shiller index showed a 19% slump from a year earlier.

The usual suspects fared very badly: Phoenix was down a remarkable 35%. Las Vegas fell 32% and Miami 29%.

I encourage you to go read the original story on WSJ Online, if only for the cool Flash graph, showing Home Price with respect to earnings.

That index, which was at 91 in March 1997, zoomed to 200 in May 2006. It now stands at 128 (Dec 2008).

We're starting to re-enter the range of normalcy, but we are still historically high. Without the recent bubble to muddy the waters, our current reading of 128 would troublingly high. More excerpts:

But for the market overall the picture isn't as hopeful as you'd like.

Even today, prices overall have only reverted to levels seen in late 2003. Yet by that stage the bubble was already well inflated. You would expect a crash of this scale to retrace its steps much further. To find pre-bubble prices you have to go back to about 2000 – when values overall were about a third lower than they are today.

It's true that mortgage rates, now at 4.5% to 5%, are currently very low. But relying just on that is far too simplistic. Rates were also low from 2003 through 2005 – as many pointed out, disastrously, at the time.

Is there a bullish scenario for house prices? Sure. If all the government spending to turn around the economy reignites inflation in a year or two—as some predict—house prices could begin climbing again. But if the current price deflation continues, look for house prices to keep dropping.

Over the long term, average home prices have tended to track average earnings. And by this measure the market may have much further to fall.

I looked at Case-Shiller's index back to 1987 and compared it to federal data on average earnings. The result, rebased to 100 in January 1987, can be seen here. And it's alarming. By this (admittedly very simple) measure, today's home prices are actually more expensive, in relation to average earnings, than at the peak of the 1989 property bubble.

Equally noteworthy is that when the last property bubble burst, it took about eight years before the market showed really strong signs of revival. This bubble was far, far bigger.

I'm telling you, folks, this thing is still in the early innings. And if you've got any sense at all, you know Bend is far, Far, FAR behind the curve. We're in the 2nd inning, at most.

We've fallen almost 50% from our peak values. And we are still one of the most overvalued RE markets anywhere.

We'll hit $125K medians in Bend, and it will not recover peak values in any adults lifetime who lives here. EVER.

"A bra divided, I will not stand!"

Bend -- Uncertainty Capital of the U.S.A.

Wow, what I thought would be The Big News Of The Year, seemed to get the collective yawns of everyone in Bend.

16.1% Unemployment in Bend

No one seemed to really care about that. Well, here it is in graph form:

Bend Unemployment, unadjusted -- Jan 1990 to Feb 2009

Folks, something is seriously wrong with that.

This isn't some run-of-the-mill downturn, you can see one of those culminating around 2001, where unemployment locally almost hit 10%.

This doesn't look or feel like a little cyclical downturn, and I suppose it'd be odd if I said it did, considering the reason I started this blog... cataloging the worst financial catastrophe of our generation.

No, you can see that Bend's Small Wave days are over. The nominal yearly tops & bottoms that change with the seasons around here used to be bounded by peaks & bottoms that were between 2-4% apart.

You can easily see this on the graph. The sharpest turnaround to date was the plummet in unemployment from 11.1% in Feb 1994 to a mere 5.5% the following September.

You can see what is happening now is unheard of in modern Bend history.

The absolute low in unemployment in modern Bend history was reached October 2006, 3.8%.

There was the usual seasonal jump to 5.7% in Feb 2007.

Then something very strange happened: The usual yearly cycle of peaking unemployment in Feb & bottoming in September began to break.

The subsequent low in unemployment for 2007 didn't happen in September, as it usually does. It happened in May at 4.3%.

In Feb 2008, unemployment reached 8.1%, which proved to a high water mark that was actually breached later in the year. You can see it on the above graph.

After a short jaunt down to 6.4% in May again, unemployment figures in Bend did something they have rarely done in recorded history: They breached the standard seasonal highs that are virtually always set in February.

The high water mark for unemployment for 2008 was actually set in December at 11.9%.

Look at the graph, look at where the peaks are: They are just right after the vertical bars, which I think are December.

Unemployment peaks in February in Bend like it has eyes. It's such a reliable cycle, you can set your watch to it.

But look at 2008-2009: The cycle breaks horribly.

Here's a look at this graph, with a YoY comparison thrown in:

Bend Unemployment, with YoY comparison.

That red line is just the current months unemployment divided by the unemployment rate 12 months prior. Then I subtract 1, to get a percentage, then I multiply by 5 so that it doesn't end up being a tiny squiggly line right around zero.

So when the red line is at zero, it just says that this years unemployment is the same as last year. When it's above zero, it means this years unemployment is higher than last year, possibly indicating a downturn in the economy. And the converse when the line is below zero.

You can see there have been 3 fairly typical downturns since this series began, 1991, 1995, and 2001. The upturns were in 1994, 1997, and 1999.

The Long Boom, starting in 2003, and ending in 2007 was itself a curious anomaly. Most of Bends cyclical turns were fairly benign & short-lived. But these Bubble Years certainly made it feel like This Time It's Different.

It wasn't that the peak was so sharp, it's that it was so durable. Things seemed to get better every single day. For years. Unemployment never seemed to get worse than it did during the previous year. Only better. For 4 solid years.

And you can now see the price we will pay: An explosion in unemployment to rival anything this area has seen in modern, and probably not-so-modern history.

You wonder why I dismiss talk about How Bad This One Is Versus The Last Bust: This One Is Nowhere Near Over. This one may very well still be getting worse.

We can talk about that when the red line hits zero again. Well, actually when it is well below zero, we can talk about recovery. Because even if unemployment goes back to a yearly average of 12%, that's going to look like a recovery compared to a 15% year.

But that won't be much of a recovery. Which is what I've been trying to convey for a long time now. That blue line isn't coming down anytime soon. And it'll probably NEVER come back to where it was only 2 years ago.

It's going to stay up in it's new rarefied plateau, well above 10% for years. And years. The best of the future's seasonal upturns, will actually be WORSE than the worst downturns we've seen in the past 20 years.

We'll start becoming THRILLED with yearly low unemployment figures at 10-11%!

This graph says it all: The past 20 years of comforting cycles, up & down like gentle waves on a beach, have been replaced by a tsunami.

And possibly worse than the outright level of unemployment itself, is the yearly amplitude will increase markedly. There will be wild swings each & every year.

This is manifested in UNCERTAINTY. People will never know, from year to year, is this My Time? Will I lose my job?

This cyclicality will drive people out over the long haul, probably as much or more than the outright level of the seasonal bottoms. People HATE uncertainty. And folks, Bend is the Uncertainty Capital Of The U.S.A. for the coming 20 years.

People will leave when their job has been gone for a year. But the real outmigration will be because of the never-ending uncertainty. That's what is not going away.

BB2 Be The Best Pimp Ever!

Ripoff Outrage Boils Over

Doesn't it seem like we're entering a sort of malaise period with this economic collapse? The biggest worry of the week, was the 1/10% of 1% of AIG's bailout is going to bonuses, so the DC scapegoating/grandstanding machine went into overdrive.

Funny that just about a year ago when I said they'd be perp-walking people out of their offices, I thought it'd be almost all real estate-based types, like Summit 1031... not Madoff. It's like this thing has turned into a roiling spectacle, like The Jerry Springer Show, everyday claiming some new victim.

I have some weeks where I don't really know what to write about because things seem to be going so irrevocably wrong. This is one of those weeks, so maybe I'll keep this short.

We are in a near-manic effort to get "credit flowing" again. Everybody says that the lack of credit is the problem, and in this de-leveraging nightmare, we have to get it going again.

And funny, but the purported solution is to borrow FROM OURSELVES (our future selves) via the government, in attempt to make us take the money, now.

It's like the governement is saying, "We will take everything you ever make, to force you to take it & spend it right now"!

Very strange. Strange because the reason it is not working is so obvious, that I can't help but think the current strategy is purposefully flawed. That this is being done on purpose to achieve some ulterior motive down the road.

The AmeriKKKan people are either, A) Credit Score depleted via default, and cannot borrow, or B) So tapped out & carrying such a heavy debt load now, that they are unable to borrrow anything else.

There's nothing left in the AmeriKKKan consumer pack mule, yet the government is piling on more with every monetary tool in its arsenal.

It's ridiculous. The government is flooding banks with money, and they are incredulous that it isn't being loaned. Of course not. The people who are showing up to borrow are the worst credit risks in The World. But the government wants them to be lent money.

Uhhhh, that is exactly how this debacle got started.

This is so blindingly obvious that I can only assume they are attempting to achieve other ends via this "stimulus". It seems a simple reallocation of wealth from future generations to the wealthy of today.

That's where most of the money is going. Most of the "stimulus" that went to AIG went to extraordinarily wealthy counterparties. Many in foreign countries.

We're making the rest of the World solvent, while bankrupting ourselves. And our kids. And their kids.

Most of the people who walk in to buy homes simply do not qualify. What did some one write in the comments? 9 out of 10?

Banks are simply returning to prudent lending standards. All else would kill them. Yet the government is trying to insist that they return the Gold Rush Days that have brought on this debacle.

We're a country at odds with itself.

I'm not sure how this will play out, but the fact that we are A) Borrowing from ourselves & our kids at a terrible rate, and B) Distributing it to the most wealthy all over the World, does not make me feel anything but sick to my stomach over this countries long term future.

Another statement I made well over a year ago was that the USA would lose it's predominant economic might on this planet, seems now a foregone conclusion.

As a segue to that, I read a little piece about how the US Debt Passed $11 trillion this week. What took GeeDub 3-4 years back in the early part of the decade, has been done in a couple of days now. We blasted through a TRILLION DOLLARS.

And it looks to get much worse before it gets better.

The dollar got crushed as a result.

Here's a good summary of what is going on with our government's attempt to rescue us (from the $11 trillion piece):

Monetary Policy Under the Bernanke Fed our monetary policy is to print massive amounts of currency in order to head off asset price deflation. Falling asset prices, combined with way too much leverage, are the chief reasons the financial system is in such deep trouble.

Over-leveraged banks have very little tangible common equity to absorb losses in the value of their assets. If asset values were allowed to fall to market clearing prices (say another 25% decline in home prices), this would mean banks’ remaining assets aren’t sufficient to pay off their liabilities. Assets = Liabilities + Equity.

As the left side of the equation falls, so must the right. Liabilities are ostensibly fixed, so a decline in assets must be matched by a decline in equity. Again, financials are ridiculously over-leveraged, which means they have very little equity cushion to absorb losses on assets.

In other words, allowing asset prices to fall will bankrupt the financial sector, leading to systemic meltdown and worldwide bank runs. To fight the fall in asset prices, Bernanke has made clear the Fed will print money at a very rapid clip in order to buy assets like Treasurys, mortgage-backed securities, asset-backed securities, etc.

The best way to track how much money is being printed by the Fed is to watch the expansion of assets on its balance sheet. (second chart above, click to enlarge) The balance sheet equation (A = L + E) applies to the Fed just like it applies to banks.

The difference is the Fed has this magical machine called a printing press which means it can manufacture its own debt in order to finance purchases of assets. The debt it manufactures are simply electronic dollars that it puts in the accounts of those from whom it buys assets.

This is not hard to grasp actually. The Fed said yesterday that it wants to buy $300 billion worth of long-term Treasurys (in addition to another $750 billion of MBS). As an example, pretend you owned some Treasury bonds that you want to sell.

Since the Fed wants to buy them, it will conjure dollars out of thin air and put them in your bank account in exchange for the Treasury securites you’re selling. As the Fed prints money to buy assets, look for total assets on its balance sheet to expand dramatically.

An Economist article published today (see links) included an estimate from Capital Economics claiming the Fed’s assets are likely to expand to $4.5 trillion. That’s an awful lot of new dollars!

As I’ve argued before, this strategy is badly flawed. The Fed thinks the economy’s problem is falling asset prices. That is wrong; the economy’s problem is too much debt, which over-inflated asset prices to being with.

The only “solution” is to let asset prices fall. Unfortunately, this will be very painful. Pumping more borrowed money into the economy via fiscal and monetary policy won’t actually stop that from happening, it will just delay the day of reckoning and make it far more painful when it arrives…

We're attempting to stop the implosion of one bubble by replacing it with another.

This just makes it feel like there will be nowhere left to hide when we finally Man Up & just let the shit hit the fan.

I'm not sure what the ultimate outcome will be, but again, my old outrageous claims of olde seem to be apropos. Remember Zimbabwe?

I think I'm also a little "down" because I'm starting to know more & more people who are being sucked into this RE debacle.

They are decent people who did not go in over their head, kept their nose to the grindstone, and didn't go on spending binges.

But the one unfortunate thing they did was buy a house in Bend in the past 3-4 years.

And again, they are not having problems paying the mortgage. But they are becoming poor at an untold rate.

These are people who have slowly but surely just worked the the American Dream as methodically as possible, working 2 jobs, kids, etc.

But they bought a $350K house that is now worth under $200K.

That slowly but surely ascending line of net worth that took 20 years to get where it was, has plummeted to Less Than Zero in 18 months.

A lifetime of work, wiped out.

And these people are understandably upset. They are 100% broke, and they went broke engaging in the most Apple-Pie & baseball American Dream transaction that there is: buying a house.

That's what you're supposed to do when you've worked all your life in this country... you buy a house.

And so they did it, and the American Dream has turned into a nightmare.

And after going through the various stages of loss, I'm seeing a lot of these people simply resign themselves to 10 years of Bad Luck, and they are simply going to Walk Away, and Not Pay.

They have the money, mind you. But they are not going to throw 2-3X what it costs to rent each month for the priviledge of losing $2,000 per week. They're just walking away from their White Elephant.

Walk Away, Don't Pay.

Yet another prediction that seems to be coming true in spades today, that seemed ridiculous just 12 months ago.

And here's the reason:

Marge said...

The RE optomists quoted last month are from Mars:

March 09 sales to date
13 Sold @ $221k med

March 08 to date
47 Sold @284k med

I see that the steam building up in the market is just hot air.
Kinda like Dorn making a deal a day.

March 17, 2009 9:06 AM

This is just brutal. Not even 1 house per day is selling. We're starting to get to numbers that are so low volume-wise, that we're going to have to combine 2 or 3 months to get medians that even are meaningful.

My response to marge:

Wow, 70% REO & shorts.

So, the traditional 6% on those sales is $172,380, for about 17 days or $10,140 per day for brokers.

For 1,500 brokers (?), that's $6.76 per day.

Gross profit. Net might be a few bucks less.

HELLO iSKY!

The Realtor profession is going away in Bend. There is going to be a skeleton crew left when this is over. Gardner, DuBois, and a few others.

And even these people will be starving. RE will never return to it's Glory Hole Years.

But luckily we have the Doctrine of Bend Exceptionalism that will keep these people feeding this beast until it collapses of it's own weight.

Ahhhh yes. There is just no Good News in me this week folks. No bloodlust for the devouring of The Stupid, no outrage over bonuses, no disgust over our governments incompetence.

Just a general hazy malaise & despair that we are doing everything wrong. Just the unfortunate idea that as a country, as a state, as a town, and as people living in our neighborhoods with friends who are being steamrolled by this thing, that our futures are, at this very moment, being destroyed. And the same goes for our kids.

I'll end with a piece from The Bully:

The Great Depression
How they lived, what they learned — and what they say about today’s tough times

By Erin Golden / The Bulletin
Published: March 22. 2009 4:00AM PST

Vadabell Brumblay has always been careful with her money.

At 88, the Bend woman lives comfortably in the same home she’s had for decades, but she doesn’t take anything for granted.

She makes her grocery lists only after scouring the week’s advertisements and circling the best deals with a felt-tipped pen.

In a notebook, she carefully records each purchase she makes and charts all the bills she’ll need to pay during the month.

They’re the kind of habits that come from growing up in the midst of the Great Depression, a time when Brumblay watched her parents lose everything they had in a bank collapse and then rebuild their lives with the help of a small dairy business — a venture they eventually had to quit because so many people in Bend fell on hard times and couldn’t afford to pay for milk.

“You didn’t have much, but neither did anybody else,” she said. These days, with the economy in a slump and people around the country grappling with unemployment, plunging stock prices and higher living expenses, the Depression has made its way back into the news and dinner table conversations with some people wondering how it compares with today’s economy.

For the most part, Brumblay — and other Central Oregonians who lived through the period — say we’re not in a crisis like the one that swept through the country in the 1930s. But as government officials and families make tough decisions about doing more with less, they say the lessons they learned from surviving those times have become more relevant than ever.

A tough time In Central Oregon, as in other parts of the country, the Depression began in late 1929 and continued at least in part until the U.S. became financially involved in World War II more than a decade later, said Daniel Pope, a history professor at the University of Oregon who teaches a class on the subject.

At the time, many people in Bend and other cities in the region were involved in agriculture or the timber industry, including Rosanna Duberow, 86, of Bend, who lived with her parents and four brothers and sisters in a Shevlin-Hixon logging camp about 13 miles south of Bend.

For much of the Depression, Duberow’s father was able to keep steady work, but she remembers a few months when the company stopped cutting timber. Because he had a large family, Duberow’s father was given some money for taking care of company livestock, but it wasn’t always enough.

In town at Erickson’s grocery store, they let people charge groceries, and Mother had a huge grocery bill by the time (the loggers) were working again,” she said. “I know each month, she’d take so much extra to go pay that bill, and Mr. Erickson said when she finally did pay the last bit, ‘You wouldn’t believe, you’re one of the very few to even try to pay that bill.’”

Brumblay, who also lived in Bend for much of the Depression, remembers similar stories about people who were unable to afford food for their families and had to depend on credit from the grocery store owner.

“He eventually would take their homes,” she said. “They’d owe him so much, he’d have them sign their homes over. And the talk was that he owned half of Bend.” Brumblay’s family avoided falling into serious financial trouble, but it wasn’t always easy.

In the late 1920s, the family was living on a ranch near Tumalo when Brumblay’s parents decided to sell nearly everything they owned and move into a house in Bend, where Brumblay’s father worked at a mill. Shortly after they sold it all — the house, the cattle, even a player piano — the bank where they’d put all their money collapsed.

“My mother had a dollar and a little bit of change in her purse, and that was it,” Brumblay said. “They still had all their bills, and they had just sold all their assets.”

Brumblay’s parents got back on their feet with the help of a friend who was living with the family and had invested his money in a different bank. Her father kept working at the mill, but he had to compete with many other men who were also looking for jobs.

“I remember he would go down to the mill in the morning and take his lunch, and if there was work, he’d stay, and if there wasn’t, he’d come home again,” she said. “Then he’d go back at noon, because maybe there would be a half-day’s work.”

To supplement his income, Brumblay’s father purchased some cows and started a dairy business. Several days a week, her mother would pull down the seats in the family car and load it up with bottles of milk, which Brumblay would carry up to people’s doorsteps.

But as the Depression wore on, the business slowed down. Brumblay said she remembers going to houses where she knew the families had fallen on hard times and couldn’t afford to pay. For a while, her parents tried to help, but eventually it got to be too big of a burden.

“The problem was, Dad had to buy hay and grain, and some of the people weren’t able to pay for their milk, and we couldn’t afford to give it to them, so (my parents) eventually quit that,” she said. “And how can you refuse to take milk to families that have kids?”

Without savings or job prospects, some people in the area resorted to begging for food or work.

Cora Houston, 100, of Prineville, spent some of the Depression working as a teacher at the Bear Creek School, near Paulina.

In the most rural parts of Crook County, she said, many families were able to get by because they’d raise and grow their own food.

But when she’d travel back to Prineville to visit her mother — who lived in the same house Houston now calls home — she saw many people in need. “People came to the door asking for food, several times, right here,” she said.

Lessons learned Though many people have been hit hard by the current downturn, Pope, the history professor, said it’s not quite on the same magnitude of what happened in the 1930s.

“I think people are talking about it as a potential depression, but I don’t think we’re there yet, and I don’t think most people would claim we’re there yet,” he said. Some of the locals who lived through the earlier downturn agreed, saying the pain doesn’t seem to be quite as deep — or widespread — as it was when they were young people.

Art Welch, 90, of Prineville, said he volunteers at a local food bank and has seen an uptick in the number of people looking for help, but he doesn’t think the economic situation has reached a crisis point.

“As far as it being a depression? Not yet,” he said. Welch, who was born and raised in New York City, came to Prineville at 17 as a member of the Civilian Conservation Corps, a work program for young men that was organized by the federal government.

He and dozens of other men stayed in barracks-style lodging and worked on a variety of projects, from cutting down trees to building houses for U.S. Forest Service staff. In his time with the CCC, Welch made between $30 and $45 per month, though most of it was sent back to his family in New York.

With housing and meals taken care of, Welch said, the program provided a big boost to young men like himself who might have otherwise found themselves out of work and on the bread lines, waiting for a free meal from a charity group.. Welch said he thinks a similar program could be the answer to some of the current unemployment problems. “

They put the people back to work, and that’s just about what’s going to have to be done here this time,” he said. Others who remember the Depression said they worry that people today might not have the tools to stay on track if the economy gets worse.

Georgia Gallagher, 87, of Sisters, lived on a ranch two miles outside of Sisters during the Depression. She said her family got by in part because her mother was skilled at sewing, cooking and other tasks — and knew how to make a little go a long way.

“People are quite a bit different now, been used to not doing any of those things. ... I think people would have a harder time now because they don’t know how to can, they don’t know how to sew, they don’t know how to economize,” Gallagher said.

“So many of them are losing their homes, and there’s no place to live that is really inexpensive now, so it’s real hard on those people.” But some of the local Depression survivors said they think people dealing with the current downturn should follow some of the habits of people who grew up in the 1930s.

Gallagher said she canned food every year up until very recently, and Duberow said she and her husband still maintain a large garden, growing all of their own vegetables and some fruit.

Houston said she believes many people fall into trouble because they spend far more than they actually have in the bank.

Houston said she’s had just one credit card in her life, and she used it for a single purchase — $60 for a hotel room on a vacation to the Oregon Coast. Saving, rather than spending, she said, is the way to stay secure, even when the economy takes a turn.

“I would say definitely to build up a savings account if possible; even if you only had $5 a year to put in, try to have a savings account,” she said. Brumblay said she remembers a popular Depression-era saying that’s still as relevant as ever: “Make it over, wear it out, make it do, or do without.”

Though she said it’s hard to tell when the economy will make a recovery, Brumblay said the simple choices we make can go a long way in tough times. “First there’s wants and then there’s needs, and you have to learn to separate the two,” she said.

I love spending on the essentials in life! That's why I live in Bend, Oregon!

Me so horny for AmeriKKKan Debt!

Welcome to Mumbai, Oregon!

Can't do a full-scale rant today, so I'll just post some interesting snippets, so we can all get right to the comment-goodness.

A Long Time Ago, In a Town Not So Far Away, I bought a really old Sci-Fi book at a place called The Bookmark. It was like a lot of buys that happen at places like this: It was a little treasure, a little gateway back to my youth, a book I read in my teens, a little reminder of the naive me-of-olde, and it was only $1.50.

It was a quasi non-fictional thesis called "A Step Farther Out" by Jerry Pournelle, an old 1970's era Sci-Fi writer who, when paired with Larry Niven, put out some good stuff. It was a survey of pop-tech and other sci-fi grandiose schemes that Pournelle thought would solve our problems.

Anyway, I guess what was sort of funny about re-discovering this book (it's been boxed up for 6-7 years now), is that Pournelle is addressing his audience as if there is this chronic & terminal disasterous condition with the World. It was written just after the Oil Shock, so I guess that's understandable.

But he writes also with the implied assumption that the Earth is going to become imminently unlivable due to pollution. He posits that population growth is completely out of control, and it'll lead to Standing Room Only within decades. He talks as if food-shortages in Africa are all but inevitable for the rest of the World.

He takes this stance that he is rebuffing The Pessimism Of The World. He's taking a stand, fighting back, and he's going to put out some Damn Pragmatic Solutions. Things such as mining asteroids, converting the Worlds oceans into farms, and quite a bit of other flying-car-in-every-garage-nuclear-power-plant-in-every-house stuff that never happened.

I guess what was really strange about this was the dissonance with what actually happened after Pournelle wrote this.

The malaise ended.

There was a huge explosion in growth, but it was not at all like Pournelle envisioned it. All the pessimism just sort of melted away.

But what's also funny is that some of the problems that he outlined as intracable, never went away. The Earths population has kept growing. Africa is still starving to death. We pollute more than we ever have.

The Oil Shock ended, but other problems of equal or greater importance remained. They're still here today.

But what fundamentally changed was The Attitude about our problems. They just changed. The pessimism just sort of went away. I guess other Feel Good topics like Growth just usurped the importance of Live Aid, and other stuff like that.

I'm not entirely sure what I'm trying to say about this, other than this planet has seen times when it looked like The End of Days before. It was just so long ago, no one except real Geezers remember it.

And I'm Not saying The Bad Times Manifested Themselves In 2 Years Just Like Now, So We Can Rest Easy because It's All Over. No. The malaise of the 1970's took a decade plus to work itself out. It took a long time. We're in the 2nd or 3rd inning.

I don't know, I guess it was sort of comforting to know that what is happening today is not totally unprecedented. We've been down before. We've been almost pathologically pessimistic about it, too.

But, it did end. After a long time, it did end.

Next --

We found out what we pretty much knew all along: Patty Moss & Co are frauds.

Cascade Bancorp posts wider adjusted fiscal 2008 loss

Friday, Cascade Bancorp Inc. (CACB), the holding company for Bank of the Cascades, said it made adjustments to its preliminary financial results to include goodwill and asset impairment charges, additional provision for loan losses, resulting in a wider net loss for the year.

Including the non-cash goodwill charge and other adjustments, net loss for fiscal 2008 was $134.6 million or $4.82 per share, compared to a net loss of $21.2 million or $0.76 per share reported in the preliminary unaudited earnings release dated January 29, 2009.

Right. All of a sudden, not in normal earnings season, MossCo woke up & found out that their Idaho acquisition of Farmers & Merchants bank was a 100% LOSER. They wrote off 100% of the F&M goodwill.

This is becoming Standard Op Procedure for MossCo. Last quarter it was "Hey, wow, whoa! You know we just found out due to SOFTWARE ERROR, we actually LOST A SHITLOAD MORE MONEY than we originally told you. Sorry."

Now it's a HUGE LOSS, that will result in the near-nuking of CACB's net worth:

Cascade Bancorp (Oregon) Announces Filing of Form 10-K Annual Report and Audited Financial Statements; Adjusts Preliminary 2008 Results Due to Goodwill Impairment and Additional Provision for Loan Loss

2008 return on book equity and tangible equity decreased to (47.90%) and (80.51%) respectively, from the previously reported (7.02%) and (11.79%). At December 31, 2008, the Company's reserve for credit losses was $48.2 million or 2.46% of total loans and NPA's are reduced by $22.9 million to $159.4 million or 7.0% of total assets.

SO they went from a small ding to earnings to a near WIPE OUT of tangible equity. When you lose 80.51% OF TANGIBLE EQUITY, YOU ARE FUCKED. One good point to this is the tax benefits, but you have to BE ALIVE to recognize such benefits, and CACB's stock price telegraphs a different story.

So you'd think the CEO would have a pretty sobering & concrete response? Hell No! This is Bend!

Patricia L. Moss, CEO said, "We are in serious times and actions will influence outcomes. The challenges we face reflect the stress the economic downturn has caused to our customers, businesses, friends and neighbors, and community at large. We are resolved to play our part in helping the community address the challenges we share, and to progress toward an improving economic future together." Moss continued, "Local deposits from our communities are essential to the economic health in the markets we share.

We are encouraging the community to keep their money local to the benefit of our shared economy. Community banks effectively redeploy their deposits back into our communities." To this end, Cascade has provided additional assurance to customers by participating in the Temporary Liquidity Guarantee Program which provides unlimited FDIC insurance for all transaction account deposits through 12/31/09.

Commenting on loan quality, Moss said, "We continue to fund our reserve for loan losses to ensure we have provided resources under the current adverse economic conditions. In addition, we have written down a substantial portion of the residential development loan portfolio that has proven to be most negatively affected by the downturn.

Residential development now represents just 10% of our credit portfolio while the majority of the Company's loans continue to perform well. I am gratified that we have taken these actions on the credit side and exceed benchmarks for a well-capitalized bank."

OK, there are several statements of concern, but this is the most startling:

"We are in serious times and actions will influence outcomes."

What the fuck! This is where you know you are dealing with a truly deranged lunatic. Moss has just LOST 80% of the net worth of the biggest bank in Central Oregon, and all she has is some sort of whacky identity logic?

"We're in the shit, and if A= B, and B = C, then A = C. Thank You."

My God, what a fucking idiot. Everytime Moss opens her mouth, I realize that the banking system of Central Oregon as we know it, is 100% DOOMED. This vacuous dumbshit is at the helm of a sinking ship. Know that CACB at $1.22, is INFINITELY OVERVALUED. It is worth NOTHING.

I formally retract all my previous statements that it is "almost worthless". It is 100% WORTHLESS.

Next --

There's some scapegoating going on with some pretty unlikely characters lately.

Someone posted the Jon Stewart crucifixion of James Cramer in the comments. I saw it, and it was pretty good. Jon Stewart is a relatively clear thinking guy, and he tears Cramer a new corn chute. He backs Cramer down pretty well, something Cramer richly deserves.

Then Dunc posted the tut-tut-tut titled Jesse, Jesse, Jesse..., about Jesse Felders point of view on his blog, My Back Pages:

You've been talking this way for months now, and the market continued to decline that whole time. (Don't forget to leave out that little fact.) You started talking about 'bottoms' and then it would drop some more, and then you'd talk about 'bottoms' again, and it would drop some more.

Now you've even gone so far as to post an article in the Bulletin. Are you so sure it won't drop some more? Especially housing prices? Look at the Bend Economy Bulletin Board, and you'll see prices are still 99.9% down arrows.

Is it really your advice to ignore that and buy now? Really?

Jesse's been calling a bottom since I've started wiping my own bottom: About 6 months ago. And let's face it, he's been dead wrong.

And finally, the vultures have descended on Buffett himself, with articles like "Warren Buffett has lost his touch", "Is Warren Buffett Crazy?", "Bill Gates' foundation dumps shares in Warren Buffett's Berkshire", and it goes on and on.

And to add insult to injury, Buffett's Bershire (along with GE), has lost it's Golden Boy AAA status. There were only a handful of companies on Earth that had been bestowed that honor, and Buffett used it every chance he got to peddle more insurance.

So we're all supposed to jump on the Cramer-Madoff-Felder-Buffett scapegoat bashing bandwagon?

No. Well, Madoff, Yes. But Cramer is a dumbfucking stock tout, he doesn't know what else to do. The fact that the dumbshit fucks chickens on his show to get ratings is more a reflection of American tastes than anything.

He's an entertainer more than anything. If you don't get that, and you actually take his advice, You Are A Dumbass.

Felder. Again, here's a guy just posting his opinion. And for the time being, he's wrong. Fuck, I threw my retirement in 100% a few months ago. 100% WRONG. So far. Sure as hell did not and will not buy at the bottom.

So Felders wrong too. Big fucking whoop. Again, if you take someone's advice to heart, it's not their fault, it's yours. Man the Fuck UP, and admit that you are responsible for your life.

I lost my retirement money, not Felder. Conversely, when (if) things turn around, I will not be sending Felder a commission.

This same thing goes for Buffett. He touted GE right before it took a huge dump, he even bought a shitload of it. So Buffett ate his own cooking, and he's now paying. Big F-ing Deal.

Everyone Loses In A Black Swan.

But we're starting to go after people indiscriminately.

OK, Madoff deserves to die. I mean he just deserves to be stoned to death, nude, over the course of weeks. With his dick in a meat grinder. And maggots eating out his eyes.

But Buffett, Felder, and Cramer are just fallible. Shit, that goes for all of us. These guys are just wrong, that's all. Is Felder digging his own grave deeper by the day? Hell yes. Nobody's perfect. Remember the Opening Of The Second Comic Book Store On 3rd? Hey, but for the grace of God....

That's the one thing ALL THESE PEOPLE have in common: NONE saw THIS coming. Look at Cramer's video: He calls this episode "one in a million". It's not that, but it's still pretty damn rare.

And by "THIS", I mean the utter meltdown of the World's financial system. Which brings us to...

Next --

I saw on NBC's nightly news that the total Worldwide toll of the financial meltdown has been approximated at $50 TRILLION.

$50,000,000,000,000 is a lot of money. That's like $8,000 for every single person on this planet.

I know, you're thinking, "I got way more than that!". OK, good. But the vast majority of the planets population doesn't even have a fraction of that. If you started at the bottom, and just systematically wiped out the net worth of the Earth's poorest, moving towards the wealthiest, with a $50 trillion dollar vacuum, you would probably wipe out well over 95% of all individual net worth on this planet.

95% of the World would be flat-ass broke. Probably more like 98-99%. 95% is extremely conservative. Extremely.

Just an illustration of The True Total Cost of What The USA Housing Bubble Really Is. It's set us back 2-3 decades. It's set others back 2,000 years.

ECONOMIC REPORT
Household net worth plunges 18% in 2008

Consumers pay down debt for first time on record in fourth quarter
By Rex Nutting, MarketWatch
Last update: 2:35 p.m. EDT March 12, 2009
WASHINGTON (MarketWatch) -- Hit by a double whammy of declining home prices and a falling stock market, U.S. households saw their net worth fall by $11.2 trillion, or 18%, to $51.5 trillion at the end of 2008, wiping out four years of gains, the Federal Reserve reported Thursday.

In the fourth quarter alone, household net worth fell by $5.1 trillion, a record 31% annualized decline. Consumers lost $937 billion on the value of their real estate. Their direct holdings of corporate equity dropped by $1.68 trillion, while holdings in pension and life insurance reserve dropped by $1.46 trillion. Mutual-fund holdings fell by $730 billion.

Net worth has fallen for six straight quarters since peaking at $64.4 trillion in the second quarter of 2007. Net worth -- defined as assets minus liabilities -- is down 20% from the peak. The decline in wealth was accompanied by a sharp pullback in consumer spending at the end of the year.

According to Commerce Department data, real consumer spending fell at a 4.1% annual rate in the final six months of 2008, the sharpest decline since 1980.

Economists figure consumers will spend about 5 cents out of each additional dollar of wealth, or cut spending by about 5 cents for every dollar lost. "Consumers have turned a lot more cautious and are saving more," said Richard Berner, chief economist for Morgan Stanley.

In the longer term, Berner sees a "sea change in consumer behavior" that will bring the personal savings rate to 7% or 8% within the next few years as consumers begin to understand that quick and easy increases in wealth aren't likely. "Households are being forced to rely less on rising asset prices and more on their paycheck to fund everyday living expenses," wrote Drew Matus, an economist for Bank of America/Merrill Lynch. "In other words, frugality is coming back into fashion."

The decline in net worth raises the risks of deflation, Matus said. He said money supply growth turned negative in the fourth quarter, based on more complete information about the shadow banking system.

Lost decade

At the end of the year, households owned $9.9 trillion in equity shares outside of pension plans, less than the $11.3 trillion they owned in 1998. At the end of 2008, assets fell by $11.3 trillion to $65.7 trillion. Liabilities fell $87 billion to $14.2 trillion. Home owners' equity in their houses fell to a record low 43%.

"It's an old lesson: Asset values can fall quickly, but debt lingers!" wrote Bill McBride on his blog, Calculated Risk.

At the same time their assets were falling, households were taking on less debt, deleveraging their balance sheets after five years of double-digit growth in debt.

In the fourth quarter, households paid off more debt than they took on for the first time since at least 1952, when the Fed began reporting the information in its quarterly Flow of Funds report.

Household debts fell at a 2% annual rate in the quarter, including a 1.6% decline in mortgage debt and a 3.2% decline in consumer credit, including credit cards and auto loans. For all of 2008, household debt rose just 0.4%.

Since the early 1950s, debt had never risen less than 5% in a year.

Businesses also took on less debt.

Total debt grew 4.8% in the corporate sector after a 13.4% gain in 2007.

In the fourth quarter, corporate debt increased at a 2.2% annualized rate, the slowest since early 2004. The federal government made up for the deleveraging by families and businesses, however.

Federal debt increased 24% in 2008 and rose at 37% annual rate in the fourth quarter. Total nonfinancial debt -- individuals, businesses and government -- rose 5.8% in 2008 and increased at a 6.3% pace in the fourth quarter. It was the slowest annual increase in debt since 2000.

I know hbm likes to think of the poor in America as being crushed by unfeeling corporate behemoth monsters. And that's fine. But in the grand scheme of things, WE are the richest 1%. America is ridiculously wealthy by global standards.

If you actually suctioned up the $50 trillion in losses, the losses suffered by this country as a whole have been miniscule. Worldwide wealth decimation by the poor has been catastrophic. And I mean people with only a few hundred bucks to their name after a lifetime of toil.

The poorest American's are 1,000X better off than them. At least we have something to lose.

Next --

Just a little note about the min wage dogshit jobs that iSky is bringing BACK to Central Oregon.

I mean, I don't want to look a gifthorse, and apparently neither do a lot of other hungry folks, from the 200 applicants TRG got on Day 1.

But let's face it: NO ONE CAN SURVIVE ON THESE SHIT WAGE JOBS. NOT HERE.

Central Oregon always has been and always will be about the EXPLOITATION of locals. You are dogshit to the machine. You're the fucking pigs anus, cat entrails, hobo arm, and leather boot that goes into Central Oregon's LOW WAGE SAUSAGE FACTORY.

This place takes YOUR LIFE & turns it into SAUSAGE. You are dog shit. If you went to iSky, you are on the road to DOG SHIT.

Please, even a single person tell me otherwise. PLEASE! iSky doesn't have a single Family Wage job available. Nada. They have SAUSAGE JOBS. They turn lives into DEAD DICKS.

That is REAL BEND. I don't really want to pick on iSky, when this same fundamental truth applies to about 107% of Central Oregon Employers. They are a meat grinder, and you are a horses asshole.

It's a commentary on the nature of this place. It's where we are going. The Bend of Olde. If you don't like the sound of working for peanuts, losing your house, and living on China Hat Road turning tricks with donkey's, then you need to get the fuck out.

Finally --

In what may have been the event that Turned Things Around, we all found out that Bristol Palin broke up with her longtime boyfriend, and father of her illegitimate child.

This could not be better news for borderline-perverts like me (borderline?) who love Gigantosaurous Boobs. I mean, Mom was doing pretty damn good in the jugular department, but daughter looks like Bend's balloon guy stuffed something under her dress.

Those are the biggest gat-damned teeny-bopper, single mom, mega-jugs I've ever seen. I'm drawn to that shit like hillbillies are drawn to all-you-can-eat buffet's, tractor pulls, fucking yer sister and alcoholism.

So in tribute to all the Mother-Daughter mega-hottie gang-bang 2 on 1 clusterfucks that I hope to have in Heaven, I present Bristol's now-single huge mega titties, swelled by many months of suckling for your viewing pleasure.

Bristol Palin's titties being crushed into all sort of unnatural shapes due to Milk Bustout.

"My hobbies include Mother-Daughter gang-bangs, 2 on 1's, and fucking liberals and eating them."
Hey hbm, when are we gonna fuck? I'm hungry!

Bend: Doomed To Tear Itself To Pieces... Again.

Ahhhhhhhhhhhh, Bend.

I guess I've figured it out: Bend is a town doomed to tear itself apart.

Look at Buster; Here's a Bend Lifer who wants nothing more than The Good Olde Days to return in force. Guns, depression, liquor, downtown vacancies, flatbacking renters. Cowboy Capitalism at its finest.

Just about the polar opposite of today.

Now hbm; Surely there couldn't be someone more Buster's Polar Opposite, right? No.

HBM said:

"What I want to know is why is Bend considered the land of paradise?" Bend isn't "paradise" and never was. When my family and I moved here in the mid-1980s it was a nice, pretty small town. Now, thanks to 20 years of uncontrolled, poorly planned (or unplanned) growth, it's just a sprawling ugly mess with a shitty climate. IMHO.

Bend was fine for me at a certain stage in my and my family's life. It isn't anymore. I've changed, my family circumstances have changed (daughter has grown up and moved away), and Bend has changed -- a lot, and mostly not for the better IMO. Why not move on?

How about Dunc? Surely as a downtown business man, he wants things to somehow right themselves and continue his 3 decade upturn?

Laying out the odds

Scenario Three.

Things really crash, dropping 50% or even 60%. Storefronts empty and aren't refilled. People leave town. I start playing cribbage on the sidewalk with my neighbors, waiting for customers. Ironically, after the worst has hit, probably no more vulnerable than the above scenario, because concessions would be forthcoming, one would think. And I would just cut to the bone.

Tuesday, May 29, 2007

A series of restaurants went into the space the Toomies is now in. Nothing like the haunted look in waiter's eyes, as they stood, tuxedo ed in the window waiting for customers. My neighbor, Jerry from the Sole Shop, and I used to sit out on the sidewalk and play cribbage for hours.

See the common thread? It's that way with everybody.

No one is happy with Bend, because it is never quite what they want. Hell, I got here in '01, and Bend has already become a horrible perversion of what it was then.

Full of Cali-Bangers. Hot & Cold running Hummers. Sprawling STD's going everywhere. Locals gone wild with greed (Breeze, DuBois, Bauhumper, Kuratek, et al). Prices just out of control. Mindless idiotic developments. Rude fucks. Liberal elitist dicks. Fake titties.

And I'm a fairly conservative, Olde School rePug. But even hard-core flaming liberals, like hbm, are fed up with the place. Why?

Full of Cali-Bangers. Hot & Cold running Hummers. Sprawling STD's going everywhere. Locals gone wild with greed (Breeze, DuBois, Bauhumper, Kuratek, et al). Prices just out of control. Mindless idiotic developments. Rude fucks. Liberal elitist dicks. Fake titties. Well, maybe not the liberal elitist dicks.

And Bend's anti-Christ, Buster... what's his fucking beef?

Full of Cali-Bangers. Hot & Cold running Hummers. Sprawling STD's going everywhere. Locals gone wild with greed (Breeze, DuBois, Bauhumper, Kuratek, et al). Prices just out of control. Mindless idiotic developments. Rude fucks. Liberal elitist dicks. Fake titties.

Right? Right.

That's what I see as Bend's main problem: No one will ever be happy with the place.

Papa Bear Buster: TOO HOT (liberal)

Mama Bear hbm: Too cold (conservative) (and too many Busters)

Brother Bear Dunc: Barely supports one store, and yet it always attracts locusts anyway.

No one ever seems to be happy in Bend. When it's growing, it's growing wayyyyyy too fast, at a pace that cannot last, and is doomed to implode at the end

When it implodes, it drives out everyone, and the whole place is economically gutted.

Dunc is a perfect encapsulization of Bend:

• Buys first store at True Rock Bottom Price.
• Does surprisingly well. Thinks it is personal genius, not cresting wave of fad.
• Expands in short order. 4-5 stores
  
• Fad implodes.
• Stores implode.
• Hanging by fingernails. For 20 years.

This is the nature of capitalism in the USA. And the nature of Oregon is the nature of the USA squared. And the nature of Bend is the nature of Oregon squared.

When the USA catches cold, Oregon gets the flu, and Bend gets the fucking AIDS.

And I can tell you EXACTLY WHY THIS HAPPENS. This is it. Are you ready, because this IS IT:

We never diversify.

Think of the US economy as a portfolio of business, because that is essentially what it is. All are, to some extent, interdependent. With some, the correlation is low, like aircraft & BBQ sauce. With some, the correlation is high, like furniture and housing.

OK, here's a graph of the fundamental nature of bonds vs stocks:

Risk/Return space for stocks, bonds, and riskless T-bills.

You want low risk & high reward, right? That's the upper left of this graph, and the maximum return per unit of risk lies on that brown line. It assumes there is some "optimal" mix of stocks, bonds, gold, and everything else, that lies right where that brown line touches it. What's that brown line? It's where the Ultimate Uncorrelated Asset (T-bills) intersects the Y-axis.

Strangely, you'll note that if T-bill rates go UP, that modern portfolio theory indicates you should buy more stocks. Imagine grabbing that brown line by it's left side & pushing it up... it "rolls up" that curve towards 100% stocks. Conversely, pulling T-bill yields down indicates more bonds should be bought. This is where we are now, extraordinarily low short yields.

I have to say, I spent a fortune on higher education, and this was about all I got out of it.

But maybe it was enough. Because while this graph illustrates that you can ALWAYS do better by buying a mix of stocks & bonds for maximizing your risk-adjusted return, it illustrates this fundamental truth for many assets classes in a huge variety of situations.

It's why there are Swim & Ski shops in town. Hiking shoes & snowboards.

When one is up, the other might be down, and vice versa.

But, by and large, there is a general ebb & flow to the economy as a whole, and everything either is doing OK, or everything is sort of doing crappy.

But the good thing about diversification, is that IF YOU PROPERLY REBALANCE, you can weather almost any storm.

Cuz think about it: What if you buy, say 70% stocks and 30% bonds. In 1933. Well, by about 1966, your stock portion is wildly overweighted. And on that graph above, you'll be off the optimal investment weighting, which is always that straight line that is resting on the risk/reward curve.

You can see on that curve, that the optimal mix is somewhere around 30% stocks, and 70% bonds. And it gets better when you can mix it with T-bills. The ability to buy T-bills, as well as sell them (buy optimal stock/bond mix on margin) is what constitutes this brown line. The brown line is ALWAYS the best investment. ALWAYS.

Same goes with a Swim/Ski store. What if your "Ski" section starts to overwhelm your "Swim" section? What if there is a Big Upswell in skiing for some reason?

Or closer to home: What if your Breakout Comic Section seems to justify opening a new comic store? And another. And another. And another.

What happens when you're "All Comics" (ie stocks, timber or ski's), and no "Games" (ie bonds, tech, or swimsuits)?

Your portfolio becomes unbalanced.

You become too tied to the whim & weft of One Thing. Too many comics, so when comics crash, you crash harder. Especially if you "averaged in". ie: You "bought" 4 stores at the top, borrowing to do so.

Solely Buying Buffett, while sensical from almost any rational backward looking perspective, NEVER makes sense from this perspective.

Diversify OR DIE.

Now, this doesn't mean Start An Aircraft Parts & BBQ Sauce store.

It means start with comics. Add games. Add used books. Add new books. Add things that "add value" to the other things.

So diversify intelligently. But also realize your Inherent Lack of Diversification. Realize you are in Bend. Realize you are selling a very targeted set of goods. Realize your customer base may have a high correlation to some sector of the economy (ie construction).

How to fix? Internet? I don't know. That space is already saturated. Start an "Awe Shucks" blog, and see where it goes? Maybe.

I guess that's my point: Success BREEDS it's own failure. Comics, Dunc's bread & butter, almost begat his collapse. Timber, once Bend's economic mainstay, very nearly put this place in a 20 year depression.

Then we made the jump to Real Estate. Ahhhhhhhh, yes. Surely Real Estate will be our savior. It never Goes Down!

And so it came to pass that RE, via a series of well-designed, planned & executed strategies using local government & media as puppets, has come to completely dominate this little towns economics.

Once again, Bend is a completely unbalanced business portfolio, ripe for a fall. We have almost nothing else to rely on to soften the blow.

This is why, and maybe you'll remember, I've said ad nauseum, that we should have taken our RE lottery winnings and Put Them Somewhere Else. NOT RE.

We should have charges $60K SDC's, and slowly but surely diversified into a number of POORLY CORRELATED investments: A 4 year college, tech, aerospace, medical, I-97 4 lanes, whatever.

Get us the fuck out of RETAIL, RESTAURANTS & REAL ESTATE. OK, we have MORE THAN ENOUGH OF ALL 3.

We have more than enough "life style" bullshit to last us a lifetime.

But no. We doubled down on REd. Just like a lot of my friends doubled down on tech around March 2000. Borrowed to buy, borrowed as much as they possibly could.

Should have taken their early winnings, and bought something Very Poorly Correlated.

"You mean IHTBYB, they should have bought Losers? Cuz they were winning up to that point, and boring stuff like BRK was going down the drain! Why diversify into a Loser?"

Cuz, as Dunc illustrates, as Bend timber illustrates, as Japan RE illustrates, as dot-com-2000 illustrates: It is the nature of things to undo themselves. It is the nature of booms to bust.

Success begets more investment. More investment begets concentration. Concentration begets lack of balance. Lack of balance always fails.

Far worse than a bad investment, is ALL IN as an investment ethos.

When comics perform well, buy more games (or books, or pogs, or...)

When stocks perform too well... buy bonds, NOT MORE STOCKS.

When RE explodes, get tech, a 4 year college, medical, a 4 lane highway... NOT MORE RE.

But that is, in fact, what we've done. From all timber to all RE.

And it's NOT that RE is itself inherently bad, it's the timing. We went ALL IN so late in the game, we're DOOMED.

"ALL IN" as an investment theme has a 100% FAILURE RATE.

Dunc went ALL IN on comics late in the game. But really, that's the nature of the game. ALL IN AT THE END is almost ubiquitous, whereas ALL IN AT THE START is essentially unheard of.

How many failed comic stores did you say there were Dunc? Something like 80-90% have failed in the past 20 years?

It's not so much a bad Industry, as it was Bad Portfolio Management. ALL IN AT THE END. Again, ALL IN has a 100% FAILURE RATE.

So Dunc went ALL IN AT THE END 20 years ago in comics, just as Bend went ALL IN AT THE END 2 years ago in RE. Expect similar results.

Where are we now? Funny, but we are exactly where all my friends were about 90 days after the NASDAQ bubble topped. They'd mindlessly bought some Swedish telecom something for $220/sh, watched it literally go to $280/sh overnight, but then mysteriously fall to a harrowing $125/sh.

They were shaken, but Very Hopeful. Very HOPEFUL. VERY, VERY HOPEFUL.

"It's going to bounce back. I know it. It'll be back at $300/sh before you know it."

And this keeps up, as it seesaws its way to $2/sh, where it flatlines for a decade.

That's where we are. Very hopefully sitting on something at $125/sh that we averaged in at $220/sh. It'll NEVER get there again, but we don't know that. We're HOPEFUL.

So it is too late to change things. RE runs the show via City Council & COBA, COAR, and God knows what other acronyms. It's not like we can call a stock broker & bailout. It took us years (decades) to get here, it'll take decades to get out.

So what should we do, once this thing has played out, and The Hope Is Gone (15-20 years) sufficiently that people in unison shriek "NEVER AGAIN!"?

Easy, diversify. Start building a Real Economy With Real People And Real Businesses. Does it mean BEM's "5 Things Bendites Should Do Now"?

Yes, that's a start. But it should be diversification within some rational bounds.

Realize that untrammeled growth into natural areas is shooting the Golden Goose. I don't see eye to eye with hbm on a variety of topics, but even I understand that mindless growth into places like the Metolius is pathological.

Realize that people come here to LEAVE THE URBANE. They are trying to ESCAPE. Making this place more like your favorite Frisco hood is just idiotic.

I guess there should be some rational guidelines, and hope that minds greater than mine can figure out what that means, and implement it. I can only say it IS NOT BEING DONE NOW.

But the primary objective should be to DIVERSIFY our economy to the extent that is achievable. Not only is this NOT BEING DONE NOW, all measure of force, time, money and effort is going into EXACTLY THE OPPOSITE.

Our local government is 100% made up of RE stool pigeons. Bought & paid for for 5 cents on the dollar. Doing all in their power to keep the gears of RE grinding along. Wiping out SDC's, building "affordable housing" and God knows what else.

This is why I said there is "nothing to be done" to save Bend. It is owned. And it'll be owned until the local RE interests are 100% wiped out. And that'll take decades.

Then, AND ONLY THEN, will Bend be ready for a rebirth. people will have had it with RE, even RE, and they will start to rebuild. When they do, unlike after the timber bust, they should NOT let one industry come to completely dominate this town. If they do, it'll simply happen again.

Diversify. It's the only free ride out there. And it is the key to Bend's future.

Geez! 9:00AM! Geez, this time change stuff is death. Time to look for the boobies....

I diversified into both jugs!

Bend Bulletin Stops Publishing, Cessna Closes

With the release of January's unemployment figures, I think it's pretty safe to say we've reached the End of Days here in Bend.

It hasn't happened but a lot of things we're all accustomed to are going to go away. And Buster is pretty infamous for saying we're reverting to Olde Bend. But I think it's going to be worse than that.

Bubbles have a funny way of bursting. And the bursting doesn't seem to go according to anyone's plan.

I don't think we're going to have a local paper much longer. The economics aren't there.

So much of this place, the Bulletin included, survived, and thrived, due to RE. They were conjoined twins in an ever-escalating swell of leverage-fueled prosperity.

Now though, we're in The Great Unwind. The Big Deleveraging. The Big One.

We're in the most vicious down-spiral ever witnessed in our lifetimes, and still most people in Bend don't get it. There's still this enduring idea that We Are Near The Bottom, and things are going to turn around momentarily, thank you very much Dana Bratton.

But, of course, this is not true.

The RE/Bend media conjoined twin is on life support.

CACB, 3yrs

We only really have CACB to go from as a barometer of local financial health (OK, we have Prineville Bancorp PNVL, but it ain't exactly busting out either). And the patient is near death.

CACB officially went to penny stock status this week. 90 cents. Look at that chart, it's almost zero. Down 97% from it's peak.

Now the question isn't If it'll be shutdown, but When.

And if The Bully was a pubicly traded company, you would see something similar. A company on the verge of collapse.

Same with construction.

Same with local manufacturing. Manufacturing actually lost more jobs this past month in OR than construction.

The seemingly invulnerable combination of Bend media & the local RE juggernaut aren't just going to get slimmed down, they are dying. They will be dead in a year or so.

The whole infrastructure of this place -- the constant influx of people, the building, the new businesses... the whole freshness & zest & zeal, for lack of better terms -- is stopping.

We had 1 in 9 people unemployed in December. It's about to go to 1 in 8 for Jan. And in the month just gone, it promises to get even worse. And there's no end in sight.

Even the perma-optimist Obama, said that 2009 is going to get much worse before it gets better.

And I think it just hit me -- I think it was Tuesday -- that Bend is turning into Burns.

People do not go to Burns.

But Wait, you say. Homes will become cheap enough that people will want to stay here. Look at sales, they do seem to be bottoming out, as local RE-types have said. Right?

Homes are cheap in Burns.

The problem in Burns is Not cheap housing. It's no jobs. What jobs that are there, are low-wage, go-nowhere jobs. You cannot Build A Life in Burns.

There's something far more important than rock-bottom low prices to living somewhere: It's Building A Life.

It's doing something this year that makes you more than you were last year. It's making yourself a better person. It's seeing that you are piling up a skill set that is actually valuable out in The World. It's about some sort of legacy, a Life That Matters.

You can't build a life that matters in Burns.

And like a desert sandstorm can reclaim and consume an entire region, the desert is about to reclaim Bend.

Bend had been pushing out -- extending its prosperity oasis towards Burns, towards La Pine & Christmas Valley, towards Madras. The shoots of growth that started 30 years ago actually seemed like they had conquered the unconquerable. They had multiplied a thousand fold.

No more. The desert is pushing back and is going to reclaim this place.

I think a lot of people think (I was one of them): "Great! After prices fall far enough, I'm going to snatch up my own sweet-ass, rock-bottom foreclosure and just lord it over all my stupid friends who bought at bubble tops. Awesome!"

No. You might want to think about that. You might want to make a visit to Burns first.

Because I think I have a fairly prescient idea of what's going to happen here, in broad strokes.

The City will go broke.

Local paper will go broke.

Local banks will go broke.

Local restaurants will go broke.

Unemployment will reach Depression era levels.

This place will become a ghost town of The Walking Dead.

Like Burns. No life, no future, no human legacy, no nothing.

That just sort of hit me this past week. I'm starting to see quite a bit of empty parking, where it was once so full so constantly, it was really annoying sometimes.

They say downtown is filling up almost as fast as it is emptying out -- whatever that means -- but it is a losing battle. Downtown is emptying out nonetheless. Same thing all over town.

You can see The Walking Dead all around. It's 1 in 7 people here.

But at least Burns is functional; Burns has a grip on reality. Burns isn't pretending to be something it's not.

Burns has crappy shit-jobs, and crappy shit-houses. Both are at the ass-bottom of the money scale, whether paying or pricing.

Look at Bubble Bend: The whole West side is populated with vacant 3,500 sf McMansions. They were $850K. Now they're $550K. And of course, no one is buying.

No one gets it here. We have an Aspenesque housing market, that has just been plopped into a Burnsesque economy. Bend is so self-conflicted, so paradoxical, inconsistent and incongruous, it's mere existence is almost impossible.

What happens to a place that is Wall-To-Wall with mansions, where The Money seems to have taken on a will of it's own and fled, leaving confused and penniless humans behind?

Yes. It hit me this week.

Bank of the Cascades is going to be extinguished. And the dominoes will start falling in rapid succession after that.

The Bulletin will close. Cessna will close. Even the mighty St Charles may fall. The Old Mill will implode. Most of the restaurants, boutiques, art galleries, festivals, fairs, parades, schools, police stations, and local governments will simply fold.

That doesnt just mean "Cheap". That means Burns. That means No Life. That means Get Out As Soon As Possible.

See, people don't care about cheap, when their lifes work is in peril. Again, drive to Burns to witness the phenomenon for yourself.

I can buy a house today Cash in Burns. No going to though. My life is more important than getting a cheap house. If that's all I cared about, I'd be in Detroit right now.

A lot of people around here have been drinking the RE Kool Aid for so long that they can't imagine a life that doesn't revolve around RE, it's their lifeblood. It's pricing, the sales volume, the transacting, the ebb & flow of it, it's every movement, no matter how inconsequntial, is of riveting importance. Been like that for 30 years.

But in the end, this mindset will prove to be a phantom, fleeting.

Maslow's Hierarchy of Needs

Bend went from Safety to Self-actualization so forcefully & quickly, that it seemed like it was preordained. We are God's people, this is our fate to live life at it's pinnacle.

But actually this place is about existing at the Physiological level. It's at The Burns Level. It's in the red.

This is why I say Burns is Honest. Burns knows it sucks. Bend also sucks, but we think that we'll be OK, because we have surrounded ourselves with the edifices of Self Actualization, of that Shining Golden City on The Hill.

What happens in a place surrounded by the edifices of opulence after a monetary neutron bomb has gone off? What happens when you realize a place cannot ever sustain a Life Worth Living? What happens when you realize that Bend has essentially turned into Burns?

You leave. The desert reclaims it's own.

Bend Godfather: "Doctrine of Bend Exceptionalism, Dead"

I think Bend reached a seminal point in it's collapse last week.

One of the Boss Hogg's of Bend, if not The Boss Hogg, declared Bend non-Exceptional.

Through the Looking Glass With John and Bill

In his Sunday column, Bulletin Editor John Costa talks to three of Bend’s biggest movers and shakers to find out why the Bend real estate market went belly-up and how to keep it from happening again. They offer a number of ideas. Some of them make sense; one is just crazy.

Developer Mike Hollern blames the Doctrine of Bend Exceptionalism – the peculiar notion that Bend is so special that it’s immune to outside economic forces. “We were overwhelmed by the amount of money pouring in,” Hollern told Costa. “We thought that we were different from the rest of the country. It turned out that we are not so much [different].”

This really is astounding. It's more or less a declaration that all we have done, all that we have thrown our energy, time, and vast, Vast quantities of money at all these years, is actually Harming Us.

The PR & Marketing Industrial Complex of Bend is Dead.

Now I don't want to say that I originated the idea that holding ourselves above all others was a bad Idea, but I'll admit that I mentioned it once or twice:

A Prayer for Bend

And speaking of bullshit pieces, thank you Baby Jeebus for the Bulletin piece basically printing that this place is a deluded bunch of drug-addicts, by printing this quote from Sandy Henderson, new head of the perennial money-losing BendFilm: 'You know what, there’s got to be Prozac or something in the water, because everybody is happy.’

It's called KOOL-AID Sandy, and it will soon render your mind whithered & useless...

Take off the Beer Goggles, and Start ta Chewin'

The Bulletin is a prime conspirator in Boss Hogg's little pump-n-dump scheme, but sadly it is too late for that, as the idiotic RiverWild "auction" proved.

NO ONE is buying the Kool-Aid anymore.

The ass-ugly imploding nature of Bend's RE market is clearly visible in high-relief for all to see, and no amount of bullshit shoveled into the locals gullets will change that.

They've done it a million times before to good effect, and the Bulletin still believes that we can "market our way out of anything", but obviously we cannot.

IT IS OVER.

Bends Mayor Arrested and Jailed For Embezzlement

"The softness in our real estate markets has worsened in the past quarter, putting increased pressure on cash flows of developers and builders of new homes and subdivisions," said Patricia L. Moss, CEO.

"While we are disappointed in reporting this action, we feel strongly that it is prudent to be assertive in recognizing the heightened risk in this segment of our loan portfolio."

She added, "Despite the immediate cost of these steps, Cascade remains a solidly profitable and well-capitalized institution serving some of the best growth markets in the nation.

I am confident that the long-term strength of our markets and our experienced management team will enable us to effectively navigate this downturn in the real estate cycle."

You see Moss, despite being slapped upside the head with Reality, is still is bobbing for apples in the Kool-Aid vat.

Extinct Species Found In Bend Oregon

Local banks, that only months ago declared themselves fit as a fiddle financially & almost completely IMMUNE from the collapse... LIED. They were firmly planted in some Kool-Aid fueled hallucination where they were exempt from reality.

The Cult of Bend

You hold an auction, that gets press coverage FAR & WIDE, you actually get a hard-core contingent of buyers to show up, they actually BID on these shithole, shoddy tubs of shit you call "homes", and you say they are trying to STEAL THEM?

This comes back to a point I've written about several times on here, despite it's unpopularity, the idea that Bend is a town that has been indoctrinated & brainwashed into thinking that WE ARE GOD'S CHOSEN PEOPLE.

Not the "Jew Thing", but that as a town we are better than "The Rest". We deserve better. Hell, we deserve THE BEST, and by God, we'll wait until our dying day to get it.

This is a mindset cultivated DAILY by ALL BEND MEDIA.

EVERYTHING IS BETTER IN BEND. ESPECIALLY THE PEOPLE. AND IF WE ARE GREAT, SO ARE OUR HOMES, AND THUSLY THEY CANNOT & WILL NOT GO DOWN IN PRICE. PERIOD.

Q1 2007 Numbers
There's also the acknowledgment that Bend is 75% overvalued... BUT, there's also floated the idea that What Applies To The Rest Of The Country Does Not Apply To Bend.

This is my Gods Chosen People thesis, an attitude reflected in Jonestown before they all killed themselves by pounding down a little Kool-Aid with an arsenic chaser.

So, yes, I think I may have mentioned it once or twice, that the worst thing that could happen to this place was this carefully cultivated & continuously reinforced idea that Bend Is Better. I, and others on this blog, have repeatedly said that Bend Is Not Better.

Bend is Not A Flint, MI. It's Not Cleveland. But neither is it Aspen.

Bend is a regular place. With regular people. Regular, if not low-paying, jobs. Regular.

But we were fed the Kool-Aid, and were made to think we were God's Chosen People, and what applied elsewhere, did not apply here.

And the Boss Hogg's, like Hollern & Smith, as well as all of Bend media did all in their power to perpetuate this myth, that we are better, that we deserve The Best.

And they accomplished this to fantastic effect. The Kool-Aid was drunk far & wide, and almost no one is immune.

So why is Hollern turning on his own?

He's turning on the very PR/Marketing Industrial Complex that he & other God Fathers of Bend helped establish. Why is he turning on COVA, Costa, the Bend Visitors Bureau, EDCO, Roger Lee, Alana Audette, and the vast hordes of minions that run this factory, all to the assumed benefit of him & others like him? Why?

Because, as I suggested 2 years ago, it is Killing Bend. It's killing this town. It's killing Hollern. It's killing his business. It's killing everything.

The Doctrine of Bend Exceptionalism is the worst man-made disaster that will ever afflict this town.

And Hollern is 100% responsible.

Well, that's not true. Costa is also responsible. The Incredible Hulce is responsible.

No. That's not true. The Incredible Hulce is actually retarded, and cannot be held accountable for her actions.

No, the blame lies with the vast hordes of Realtors, Hometown Newspaper Editors, RE developers, contractors, builder associations, and everyone else who lied to line their own pockets. And in this place, 2-3 years ago, that was almost everyone.

But Hollern has seen the light. Maybe he's seen this blog, who knows. But Yarrow & Ironhorse have to be some pretty unmistakable thorns in his side, that Exceptionalism does Not Sell Houses. Not in a downturn. Exceptionalism actually grinds the gears of industry to a halt.

Look at all the listings in Bend: Most are still Wildly Overpriced. Nothing is moving when credit goes away, and you then have to rely on local incomes to actually move product. And Bend has lousy incomes.

Bend IS Exceptional!

Look at these 2 graphs of national housing stats, and you see that Bend is exceptional: We are still Wildly Overvalued.

Nationally, prices have fallen back to 120 months of rent. I know that most Eastside Bend STD's are still well above 200X rent!

Nationally, prices have fallen to 3.2X median incomes. Even after the incredible 40+% plunge in local medians, homes in Bend are still almost 4X median family incomes, a level that was just barely hit nationally at the absolute top of the housing bubble.

In Bend, we'll probably fall back to 80-100X rent for homes. That means medians on the Eastside may go below $100K.

If we go back to 2.4X median family income, and incomes remain constant (a fairly dubious assumption), then Bend medians will fall to around $140K.

The End of an Era. The End of Exceptionalism.

To that end, here are the hard numbers:

National recession takes its toll locally

Some parts of the regional economy are stabilizing; others are not

By Jeff McDonald / The Bulletin
Published: February 22. 2009 4:00AM PST

Central Oregon’s economy took a severe hit from the national economic collapse in the fourth quarter of 2008, and as it moves forward there is no single remedy for recovery, according to a University of Oregon economist who authors a quarterly business index for The Bulletin.

The national recession hit Central Oregon in the form of skyrocketing unemployment claims, continued weakness in housing and depressed visitor activity, said Timothy Duy, adjunct professor of economics who authors the Central Oregon Business Index.

The index provides a seasonally adjusted look at the region’s economy based on nine economic variables, including Deschutes County building permits and Central Oregon housing units sold, Bend lodging tax revenue and unemployment claims.

The index dropped to 145, down 1.8 percent from the previous quarter and 7.2 percent from the same quarter in 2007, according to the report. It is the fifth consecutive quarter the index has declined.

The trajectory of the index, rather than its numeric value, is more important for understanding the health of the economy, Duy said.

Already, the last five quarters are showing a steeper decline than the recession at the beginning of the decade, he said.

The index weighs data from Central Oregon’s economy dating back to 1997. “Some things are stabilizing because they couldn’t get any worse,” Duy said.

“But I don’t think the employment outlook is stabilizing. I don’t think the forces of the national picture are stabilizing. I don’t think foreclosures are stabilizing.”

Tourism and the region’s employment were especially hard hit in the fourth quarter, bringing home to Central Oregon a national economic crisis that froze credit and tightened consumer spending.

Lodging revenues, adjusted for inflation, contracted to levels last seen in 2004, Duy said. Home sales appear to have stabilized at around the 200-homes-sold-per-month mark with 183 homes sold in Deschutes County on a monthly, seasonally adjusted basis during the quarter.

By comparison, there were roughly 250 monthly sales in the preboom era and a bubble high of 560 monthly sales in second and third quarter 2005, according to the report. Building permits remained depressed.

A monthly average of 56 permits were issued during the quarter, according to the data. “If you are an economy that is geared to build 600 homes per month and you are only building 50, you are essentially at zero,” Duy said.

On a brighter note, median days on the market declined significantly, likely a result of falling housing prices, he said.

“There is some evidence that home sales have stabilized at relatively low levels,” he said. “This suggests the possibility that some bottoming is occurring.

However, the reason that home sales are stabilizing is that prices are coming down to realistic levels.”

Also clouding Central Oregon’s economy was an increasingly bleak jobs picture.

Deschutes, Crook and Jefferson counties posted monthly unemployment rates that were among the state’s highest in the fourth quarter.

Deschutes, Jefferson and Crook counties reported 11.3 percent, 13.3 percent and 14 percent unemployment, respectively, in December, according to the Oregon Employment Department.

Unemployment claims for Deschutes County shot up to a seasonally adjusted average of 4,133 per month in the fourth quarter from 3,032 in the third quarter, according to Duy’s data.

Nonfarm payrolls, meanwhile, remained steady, which is unlikely to continue in the first quarter of 2009 due to the high number of jobless claims, Duy said.

Duy’s report was completed before revised data was released earlier this month by the Oregon Employment Department that showed a much gloomier picture of job growth in the region.

In previous reports, Deschutes County’s employment picture remained soft, with 0.9 percent job growth in 2008. But the revised data posted Feb. 12 on the agency’s Web site, www.qualityinfo.org, showed a 3.9 percent job loss in the county and monthly job losses dating back to December 2007, said Stephen Williams, the region’s economist and a Salem-based usability analyst for the Employment Department.

December 2007 marked the official start of the recession, according to the National Bureau of Economic Research.

Almost every industry in the county lost jobs in 2008, Williams said. “It shows the picture that people are feeling,” Williams said.

“This finally reflects the sense of what’s going on in the community.”

Construction was hardest hit in the county, losing 2,000 jobs in 2008.

The job losses brought the county’s construction employment down 25 percent, or down to 6,070 jobs, about equal with its 2004 numbers, Williams said.

Manufacturing lost 240, or 9.6 percent of its jobs, in 2008, while professional and business services lost 300 jobs, or 3.9 percent.

The only sectors to gain jobs were education and health services, leisure and hospitality, and government, Williams said.

The new data was “astonishing,” said Roger Lee, executive director of Economic Development for Central Oregon, which promotes business recruitment and retention.

He was skeptical about the state’s employment data, which changed from only one month of job declines in 2008 to every month showing job declines back to December 2007.

“When you go from modestly positive numbers to fairly severe ones, that’s a shock,” said Lee, who called the fourth-quarter economic collapse “historic” in its scope.

“It came down to the collapse of the credit markets, which trickled down locally to the aircraft industry,” he said, referring to layoffs locally at Cessna Aircraft Co. , which started to take effect in January.

“We had been projecting growth for 2009. But all of a sudden the credit crunch came along and Wall Street had its issues.

People did not feel nearly as wealthy as they once did.

Overall, the wealth of the nation has taken a … dive.”

Lee predicted a slow recovery, contingent upon a revival of the credit markets. “2009 is going to be largely a contractionary year,” he said. “But I think the region will start to emerge in 2010.”

Duy was not surprised by the revised data, saying job losses would be reflected in declining payrolls in the next index.

The region’s economy will stabilize with small increases of activity across multiple industries, he said. “There is no magic bullet for the region’s recovery.”

December was an “absolutely brutal month” for Central Oregon tourism, said Alana Audette, president and CEO of Central Oregon Visitors Association, which promotes tourism for the region.

Room-tax collections for the city of Bend and Deschutes County dropped 28.6 percent and 18.6 percent, respectively.

It was a wake-up call for the industry, which expected bad but got much worse, Audette said.

“We were doing OK and it’s not that we didn’t see it coming,” she said. “But December was the month where we learned that weather plays a tremendous role in our success as a visitor destination. The state was seeing a lot of layoffs, and combine that with brutal weather conditions … that made accessing our destination very difficult.”

Realtors are hopeful the region hit bottom in the fourth quarter.

2008 was a painful year for the region’s Realtors, builders and mortgage professionals and has resulted in a thinning of the ranks of real estate brokers, said Wendy Adkisson, principal broker with The Garner Group Realtors and Development LLC, in Bend.

Adkisson is on the Central Oregon Association of Realtors board.

The number of licensed Realtors in Central Oregon dropped from about 2,129 in January 2008 to 1,477 on Feb. 19, a 30.6 percent decline, according to Central Oregon Association of Realtors.

Those brokers who are still active are seeing sales pick up as prices decline.

The first quarter of 2009 is on pace to match the first quarter of 2008 in sales, Adkisson said. “We’re just excited to be even.”

Median sales prices, which were $396,000 in Bend in May 2007, have fallen to $227,500 in the first 1½ months of 2009, according to data from the Central Oregon Association of Realtors. That’s a decline of 42.5 percent.

“The truth is we have taken a huge hit from our highest price point,” she said. “I wouldn’t want to swear that we are at the bottom, but I think we’re at a trough.”

At least half the 2009 sales have either been short sales, in which a home is sold for less than the amount owed on it, or sales of bank-owned property, Adkisson said.

“We’re down inventory-wise because for the most part we’ve got sellers who are realistic about where they need to be if they want to sell,” she said.

“You can buy a nice house for $150,000. That may be a blessing for all of us.”

After the downturn, Central Oregon — and the rest of the country — will emerge looking very different, Duy said.

“There is a tendency for people to think that their boom was somehow unique, but the growth that occurred the last five to six years was fueled by credit intertwined with an asset bubble,” Duy said.

“We’re moving to the other side of that. You have to think what the world’s going to look like in the absence of that credit growth. Even when you get to the other side of this, you won’t have the factors that were responsible for this surge in consumer spending.”

Jeff McDonald can be reached at 541-383-0323 or at jmcdonald@bendbulletin.com.

The End of an Era

Pretty bleak.

But what's funny, is you can still smell a whiff of hope there. A whiff of, "We'll be back to bubble times again, if we just believe!"

Of course that's ludicrous. And Duy, for once, hit's the nail on the head in his final sentence: We're in uncharted waters here. Bend has Never, in modern history, faced an economic climate like it does now.

You can see why Hollern sees Bend Exceptionalism as the New Enemy. Exceptionalism doesn't sell houses. Exceptionalism doesn't sell anything. We're looking at the complete destruction & meltdown of this place, and The Doctrine of Bend Exceptionalism (ie Drinking The Kool Aid, We Are God's Chosen People) is the root primary cause.

RIP: The Doctrine of Bend Exceptionalism.

OK, some final ideas. I find myself over at Jesse Felders My Back Pages blog fairly often, and I think it's fair to say that he is Up on the stock market.

And maybe for good reason. For the First Time In Modern History, the DJIA is DOWN over 50% from it's peak. We came close in the 70's. But I don't think we made it to -50%.

Even some unquestioned dogma is starting to look shaky:

A Bigger Bargain Than Buffett Bought

One of the complaints people made about Warren Buffett's investments in financial companies last year was that regular investors weren't able to secure similar terms for their own portfolios.

In 2008, Buffett invested in companies like Goldman Sachs and General Electric receiving preferred stock that pays a dividend of 10% and warrants to purchase common stock at a set price. Well those people should take a second look. Right now, regular investors can secure terms even better than the Oracle of Omaha.

GE common stock currently trades at a 50% discount to the strike price on Buffett's warrants AND currently pays a dividend yield significantly greater than 10% (this may be reduced in the near future, however, to help maintain GE's AAA credit rating).

People are starting to question Buffett and whether he's lost his touch.

People are starting to question "Buy & Hold" as a philosophy.

This only happens after severe losses. And it has ALWAYS been a Great Harbinger of a Time To Buy.

And I largely agree with Jesse on a lot of points, and I actually do think that stocks can & will represent value someday.

But I'm starting to wonder just how long that will be. I think I'm a lot like Felder, in that I and much of the Vast Contrarian Stock Buying Contingent in this country, people that think they're smarter than the herd, just may have it wrong. Terribly Wrong.

I know I have. My IRA is a shriveling prune of investment crap at this point. And I bought well off the highs.

I think we're looking at our Black Swan moment. The time when we say It's Different, and unlike the past 20X when the herd all said this, this time it actually IS DIFFERENT.

Look at Japan. After topping out near 40K, the Nikkei today sits near 7,400, or down 81%.

Sometimes IT IS DIFFERENT. Sometimes Buy On The Dip is a TERRIBLE IDEA. Even when it's a historic dip. Even when it's a down 50% dip. Buying the Nikkei at 20K, 50% off the top, would have been buying a historic dip... and a TERRIBLE IDEA.

I'm wondering if my own predilection to buy in the DJIA 5,000's will be usher in yet another round of punishment. Because I agree with Felder: When compared to historical markers of value, the US Stock Market is plumbing historic lows.

But that's exactly the nature of Black Swan events: They blow away historic expectation. They're something you've never seen before.

And I've said it before: This will end worse than anyone thought possible, even me.

OK, I'll leave it on an Up Note, as always!

I believe in Exceptionalism!

Barack "100 cents on the Dollar" Obama Will Save Us All

Sometimes it's good to remember how something Bad Got Started, so you can figure out how to stop it.

At some point, back in the 70's (80's?, 60's?), we started getting little applications in the mail. It was actually the norm to have only one credit card way back when, like it was the norm to have 1 TV or 1 car or 1 house.

Then people started applying for another. And things still seemed OK. You could get more stuff, and paying 3% on 2 cards with $1,000/ea was not the end of the World. It was actually nice, you didn't have such a rigid connection between earning & spending. People could bridge the gap on the odd occasion when they actually lost their job.

But saving became a little less important. And there was this strange creeping feeling that we weren't spending real money. I got my first credit card when I was fairly young, and I certainly remember that feeling.

Pretty soon though, the urge to save pretty much went away. The urge to spend increased with each new application filled out, and new plastic arriving in the mail became something of an expected ritual. In fact, those applications started to feel like income.

And things NEVER got worse because of this. People seemed happier. In fact a whole generation of people base their happiness on consumption. They don't even know it. I'll show an illustration in a bit.

So things seemed to get eternally better. More jobs. More income. More stuff. Every indulgence indulged, every craving sated.

Then, round about 5-10 years ago this credit-fueled industrial complex began engaging in some practices that seemed great, but they ultimately sowed the seeds of economic destruction:

• We started putting unqualified borrowers in homes.
• We started accepting nothing down on a home.
• We started lying to put them in a home.

See, we did this with those credit card app's, right? Sure! Who hasn't hit hard times, got a CC app, and lied to get one, and bridge the gap? Or, maybe you just wanted another card, because you could get money at near 0%, and if you inflated your income, you'll be eligible for a buttload of extra cards, right? And the credit card companies NEVER CHECKED!

It was become standard issue to LIE on credit applications. So when they began Securitizing Mortgage Loans, it became OK TO LIE. Why not? They were going to sell the loan to someone, who was going to sell it again, ad nauseum. And this scheme was working out great! Everyone got a little slice of the action, and foreclosures, price declines, joblessness, and other such nasties had Never Been A Problem Before.

So we had historical evidence on our side. We had a booming economy on our side. We had rock-bottom defaults validating these practices. Everything was peachy.

So what did we have, circa 2005-2006? We had an incredible over-abundance of homes. An overabundance of cars. Overabundance of clothing, computers, food, carpet, factories, businesses. An over-abundance of JOBS. Yes. Most of the jobs created in the 5-10 years prior to The Boom, are artificial. They really are not meant to be.

The credit was not meant to be. The consuming was not meant to be. So the jobs & businesses behind them are not meant to be. We've had quite artificially low unemployment for a good decade. Go to Wal-Mart: Look at the troglodytes working & shopping there; those people should be kept in trailer parks, away from the rest of humanity.

And Yes,I went there yesterday. And on a Sat afternoon, I have never seen the parking lot so empty. EVER.

So lots of the stuff lying around you right now, is probably from a place whose existence is predicated on demand about 30% higher than it is right now.

So the upshot is that demand & spending need to crash for equilibrium to be reached. Unemployment goes way up. Lots of factories shut down. Demand just goes away, and simple economics of supply & demand reassert themselves, and prices fall.

As I said Long Long Ago: The only way to pay off debts is to sell stuff or make more money.

The "make more money" option is being lost at a clip of about 50,000 jobs/day. That leaves Selling Stuff.

Selling houses. Selling toys. Selling cars. Selling computers. Selling everything. And not just re-selling house, or re-selling computers: Builders have crushing debts & need to build & sell more homes. Dell has factory capacity that costs them when idle. Airlines. Flea markets. Garage sales. GM. Banks. Home sellers. All have product that must go.

We have a FLOOD of stuff from ALL CORNERS... and no one can buy it.

So along comes The Stimulus Package. That'll set it right... right?

Well, the first slug of the bank bailout billions is out there, and guess what? The Banks Are Not Loaning. Gee, I wonder Why?

Oh....right, right, right, right, right. Cuz they have TRILLIONS in bad loans on their books. Now they can do one of a few things.

They can go into the Free Market and SELL THESE LOANS, and realize essentially that they are insolvent. The banking system in the USA is technically INSOLVENT RIGHT NOW. If they realized the losses, the CEO-pay gravy train is over & Disgraced Idiot Era begins. Is it any wonder they are not doing this?

And really, why do this, when Obama, Our Lord & Savior, Has Promised that he'll Make It Right.

Father Barack "100 Cents on the Dollar" Obama

This brings up Option 2: Wait to be bailed out. Wait for TARP money that you can stick in the vault. Don't even have to worry about bad loans, or realizing the losses, cuz Barack gonna make it all all right.

"We gonna get that TARP money!"

So the bailout, and it's promise of making us all whole again, has actually exacerbated & prolonged the problem. Every bank in the country is waiting to accept & BANK their piece of the trillions. Ain't gonna lend it, that's for damn sure. Fool me once...

So we are caught in a deflationary spiral. Lots of people are looking out the Side Window, and telling us, "NO! We're Not In A Depression! Now Deflation seems to precede, cause & exacerbate a Depression, but we ain't in a Depression. Look. Out the side window. We're just in a rapidly deteriorating Deflation. There's really No Way To Know what lies ahead. Sure, about 99.9999999% of the time, deflation leads to Implosion, but we can't be sure! So all we can really do is Hope For The Best. And plan for the best. And start that new handbag store, despite the complete failure of the last one".

Stock slaughter

For equities, a sustained period of deflation is widely seen as a disaster By Alistair Barr, MarketWatch

SAN FRANCISCO (MarketWatch) -- As 2009 began, U.S. dairy farmers slaughtered more than 70,000 cows in one week to fight slumping prices.

Herds are being culled at the fastest rate in almost two decades as the recession withers away consumers' demand for everything from frothy cappuccinos at Starbucks.

In January alone, milk and cheese prices plunged by at least one-third. Similarly painful adjustments are playing out around the world as companies try to slash production and cut jobs in the face of falling demand and waning pricing power.

The problem is that, as more companies hunker down, demand may weaken further, spurring another wave of downward pressure on prices that would usher in a prolonged period of deflation.

"The combination of credit-crunch deflation and recession is forcing companies to conserve cash by firing workers and slashing capital spending," said investment strategist Ed Yardeni. "That should work for one company, but when they all do it, it just exacerbates the situation by cutting demand all over again."

Many investors believe that a lengthy bout of deflation is unlikely.

But if consumer prices do indeed fall for a long time, the result is likely to be a disaster for much of the stock market, investment professionals say.

Investors could minimize their losses in stocks -- and maybe even capitalize a little on the situation -- by paring their portfolios of the most vulnerable assets while steering toward sectors that are more resilient to a deflation wave.

Companies that may suffer less include those with costs that fall more than the price of their products, such as Dean Foods, and firms that help consumers save money, like Wal-Mart Stores and McDonald's Corp. But many sectors including banks, metals companies, retailers and manufacturers would likely be crushed by sustained deflation. "Sometimes an entire asset class is not a good idea," said Kevin Harrington, chief economist at San Francisco-based Clarium Capital.

Clarium, which runs a $2.24 billion global macro hedge fund, is avoiding stocks, while betting on gains in the U.S. dollar, which Harrington describes as "implicitly a deflationary trade."

No global macro hedge funds were bullish on U.S. equities, according to a survey in early February by consulting firm Greenwich Associates.

That was down from 46% in January and 62% in December. The lowest level of interest in U.S. stocks before that was 8% in October 2007, just before the Standard & Poor's 500 index began a 45% slump.

"It's not a question of if. Deflation is upon us," said John Brynjolfsson, chief investment officer at Armored Wolf LLC, a global macro hedge fund in Aliso Viejo, Calif. "It's a question of how bad it will get."

Steven Bell, a former Deutsche Bank economist who runs a global macro hedge fund at London-based GLC Ltd., has been betting against, European and Japanese stocks, while buying two-year German government bonds.

"Deflation is a serious threat," he said. "You have to say that all companies would lose in such an environment, but some would lose less than others."

In contrast to equities, deflation typically boosts long-term government bonds because their fixed payments become more valuable as the price of goods and services fall. See feature on deflation and the bond market.

Japan

When Japan suffered its most severe bout of deflation, from October 2000 through January 2003, only one sector of the nation's stock market -- electric power and gas shares -- posted gains, according to Morgan Stanley.

Shares of non-ferrous metals producers, communications, banks and services companies dropped more than 60% during the period. And there's a worrying difference between Japan's experience and the current predicament of the U.S.: The Japanese had lots of savings when the country descended into its deflationary recession, but U.S. consumers are now mired in debt.

"The societal effects were not nearly as dramatic as we're experiencing now in the U.S.," said Brian McAuley, chief investment officer at Sitka Pacific Capital Management LLC. "People had much more to fall back on in Japan, while our consumption is falling dramatically."

McAuley is investing in gold and gold mining companies, while keeping his clients' equity exposure at zero.

He's expecting more stock market losses, with the Standard & Poor's 500 index possibly falling to 650 points, more than 20% below current levels.

Deflation scare trades

Morgan Stanley strategist Ronan Carr recently advised investors to keep most of their money in cash and gold. Gold is usually considered a good hedge against inflation, rather than deflation.

However, Carr said the precious metal would likely provide protection in either scenario. Banks should be avoided, partly because deflation increases borrowers' debt in real terms, making it harder for them to repay loans, Carr explained.

Bank stocks in Japan slumped 91% during its long fight with deflation and slumping real estate, according to Goldman Sachs. The KBW Bank Index, which tracks the largest U.S. banks, has dropped roughly 77% since the housing bust began two years ago.

That suggests, in a worst-case scenario, U.S bank shares have another 60% to fall, Goldman analysts warned this week.

Mining companies carrying lots of debt, such as Xstrata , may also be losers because the real value of their interest payments would rise while the prices they can charge for the metals they produce falls, Carr said.

Other so-called cyclical stocks, such as carmakers, should also be avoided, he added. Relative winners include companies that generate strong cash flow and have little debt.

Industries that have pricing power and are protected from new competition could also survive better. Tobacco companies, drug makers and property and casualty insurers fit those criteria, Carr says.

Already declining

While debate swirls over whether deflation or inflation will emerge over the long term, prices are already falling in the U.S.

The consumer price index fell 1% in October, the most since the Bureau of Labor Statistics began publishing seasonally adjusted prices in 1947. The CPI slumped 1.7% in November, another record, and 0.7% in December.

Morgan Stanley estimates that by July, U.S. consumer prices will have fallen 3% from a year earlier.

Merrill Lynch sees the CPI down by the same amount by the third quarter. Once falling prices form a trend, it's difficult to reverse, partly because consumers are encouraged to save rather than buy.

That dents demand and sales, potentially inflating companies' inventories and triggering more discounts. "

Potential buyers realize that they can negotiate even lower prices simply by waiting," Brynjolfsson said.

Fixed debt payments get larger in real terms, which means any credit problems impacting the financial system only get worse, he added.

The auto industry has already been buffeted by deflationary winds. Most new car purchases are at least partly paid for with loans.

The transaction results in two costs for consumers -- the extra money for the loan and the impact of an asset that begins to lose value the moment it's driven off the lot.

But in a period of deflation, the cost of the loan increases because the debt payments rise in real terms.

The result has been a plunge in new car sales which has pushed U.S. automakers General Motors, Chrysler and maybe even Ford to the brink of bankruptcy.

One carmaker, South Korea's Hyundai, is trying to tackle the problem by letting buyers return vehicles, at no cost in most cases and with no dent on their credit rating, if they lose their job or income within a year.

"That's a direct response to the deflationary psyche of buyers," Brynjolfsson said. Cutting capacity Airlines performed relatively well last year when their costs fell as oil prices slumped. However, demand for flights started dropping too, pushing ticket prices down 11% from their August high, according to Yardeni Research. "

Airlines benefit when oil prices decline, but they lose if conditions are such that no investment bankers are flying to see their clients," GLC's Bell said. "Space in first class and business class has been dramatically reduced."

Bell was speaking from Kuwait, an oil-rich country which only a year ago was dogged by inflation concerns. "January is usually very busy, but the Middle East is much quieter this year," he said.

"The hotels are empty and flights are not full." The parent companies of American Airlines and United Airlines said in January that they would cut capacity further this year to try to halt the decline in airfares.

The retail sector has been particularly hard hit as slumping demand forced many companies to slash prices to whittle down ballooning inventories.

Costco Wholesale Corp., one of the world's largest retailers, sent a shudder through the industry in early February when it issued a big profit warning.

The company said it cut prices aggressively to drive sales, but that took a chunk out of margins. Eggs and butter prices were chopped 10% to 20% and milk prices were slashed more than 20%, Chief Financial Officer Richard Galanti said. "

Arguably, a good chunk of that is short-term, as long as we don't live in a recession forever and as long as we don't see huge deflation," he added, during a conference call with analysts. Even luxury retailers have slashed prices.

Saks Inc. cut designer-clothes prices by 70% before the holiday shopping season. Still, the department store operator reported a 24% slump in January sales, partly because shoppers continued to buy sale items, rather than regular-priced merchandise.

"What the sector will have a tough time doing is returning to full-priced business," said Brian Sozzi, an analyst at Wall Street Strategies.

"Consumers are now trained to expect discounts." Nuts and chips Other companies traditionally considered resilient in recessions have also been hit by deflationary troubles recently.

Kraft Foods, the world's No. 2 food maker, reported a 72% drop in fourth-quarter profit as it struggled to deal with declining food prices.

In January, Kraft was forced to cut prices on its Planters nut snacks after it lost market share. When Kraft raised prices last fall, its rivals didn't.

Technology companies are used to falling prices, but the recent drop in chip prices has been so severe that several companies have suffered.

The price of DRAM, a memory chip commonly used in personal computers, slumped 77% from May to December last year. NAND flash chips, used in cell phones and digital cameras, have fallen 62% in price during the same period, according to iSuppli.

Shares of Micron Technologies, a leading DRAM supplier, dropped 64% last year, while SanDisk, one of the largest NAND flash makers, slumped 71%. Qimonda AG, a big German DRAM maker, went bust in January.

Possible winners

Some companies may benefit from deflation if their costs fall faster than the price of the products they sell. Take Dean Foods.

The company buys milk from dairy farmers then processes it, distributes it in refrigerated diesel trucks and sells it to grocery stores and other food retailers. The recent drop in milk prices and a slump in diesel in the past year have cut Dean's costs dramatically.

That's made up for declines in the price of the dairy products it sells, improving profit. As recently as Wednesday, Dean Foods said that fourth-quarter profit more than doubled and issued a bright forecast for 2009.

Other companies that offer consumers ways to save money may also avoid some of the damaging effects of deflation. Sitka's McAuley said Wal-Mart may benefit as shoppers become thriftier.

Meanwhile, fast-food giant McDonald's has remained resilient in recent months. "Companies that provide consumers with the opportunity to save some money and still get fairly good service and products may do OK," Yardeni said.

Even so, Yardeni and McAuley warn, if deflation lingers for a long time, there would be few such examples for investors to consider.

So deflation, and it's attendant terrible side-effects, is here. Prices, demand, and jobs simply go into a self-reinforcing cycle of decline. Easily illustrated by Japan's economic conditions for almost the last 2 decades. Generation Lost.

Japan's reaction was to hope against hope. Still is. Banks STILL hold trillions in NPA over there. They are entering their 3rd decade of Asset Denial. They won't sell or re-price, or otherwise realize these loan losses, as the corporation would cease to exist. The Overhang Continues.

So what are we doing? Surely we aren't following Japan's Bad Example, right?

Ohhhhh, we surely are. Everything possible is being done to avoid realizing losses. Everything possible is being done make it to Barack's Promised Land, where TARP, and other bailout funds flow like water. Everything possible being done to Ride It Out, wait for the bailout some we can bank the money, wait for The Bad Bank to take All Our Bad Loans. Every bank in America made whole again.

Maybe. It's possible. We can certainly print the money.

But The Losses Will Be Recognized. At some Point. By Someone. And that someone is taxpayers. Which seems OK, since it's just us chickens. We made the mess, we'll fix it, we'll be fine.

Actually, this is true in some respects. But what is Really Happening, is that the wealth of this country is being reallocated.

All the banks with bad loans are having their negative net worth made whole.

All the people with foreclosures, are being made whole.

Trillions are being expended to do so. And we are all going to pay. Even those who had NOTHING WHATEVER TO DO WITH CREATING THE PROBLEM.

The Responsible are bailing out the irresponsible. The Good bail out the Bad. The winners are being made to lose.

Did you buy 6 houses by LYING on your mortgage applications at the top of the Bubble mega-froth? Lucky me, I am going to bail you out, because I chose to rent, and not lie, and live within my means.

Citigroup and J.P. Morgan suspend foreclosures

Obama to provide more details about foreclosure prevention plan in Arizona

WASHINGTON (MarketWatch) -- Citigroup Inc. and J.P. Morgan Chase & Co. on Friday announced that they would temporarily suspend foreclosures, as Washington's debate continued about how to save the U.S. economy and moribund housing market.

In a letter to House Financial Services Committee Chairman Barney Frank, D-Mass, J.P. Morgan Chief Executive Jamie Dimon said that he would set up a three-week moratorium on foreclosures.

Citigroup, in its own statement, said that it would suspend foreclosures until the Treasury plan is finalized. The announcements by Citigroup and J.P. Morgan come as President Obama prepares to announce more details about his plan to stem home foreclosures in an address on Wednesday in Phoenix, Arizona, according to White House press secretary Robert Gibbs.

The Arizona housing industry has been pounded by the slow economy and the state is now seeing some of the highest foreclosures rates in the country.

The Treasury plans to use $50 billion of the remaining $350 billion in bank-bailout funds for some form of foreclosure-mitigation program, but it has yet to produce details on the subject.

The goal of the program, which is part of a $1.5 trillion financial rescue program, is to help troubled homeowners avoid defaulting on their loans.

The Obama administration is working on a program that would subsidize mortgage payments for troubled homeowners subject to an affordability test, according to reports.

This approach would be different from other assistance programs, because borrowers would go through a standard eligibility test and could be approved before their mortgage becomes delinquent.

Citigroup and J.P. Morgan are responding to a request from Frank, who pressed bankers on Wednesday to voluntarily set up a moratorium on foreclosures until the Treasury Department has put in place a plan to alter mortgages.

In addition to Frank, the Office of Thrift Supervision asked the federal and many state-chartered thrift institutions it regulates to stop foreclosures on owner-occupied homes until the new plan is finalized in the next few weeks.

Frank, in a meeting with reporters on Wednesday, said he expects that more than 90% of banks will halt foreclosures until the program is up and running.

He declined to provide details of what kind of plan he would like to see take place, but he said some principal write-down for troubled borrowers would be a key part of it.

A Treasury staffer said Tuesday that the program could resemble a proposal introduced by Federal Deposit Insurance Chairwoman Sheila Bair that would use funds from the bailout package in a program to help avoid foreclosures.

It is a loss-sharing program between mortgage servicers or investors and the FDIC and deals with loans that fail six months or longer after being modified.

See? Everyone waiting. Everyone going to get bailed out.

In the end, it's so tragic, you just have to laugh. I am, at some point, going to pay higher taxes for the STD's built on the Eastside. I will pay so that mortgage app liars will be bailed out of the lies. I will pay to artificially somehow keep housing prices high, so that I cannot afford one. I will pay for being honest and living within my means.

I made a bad choice.

I'll learn next time. I want my bailout money. I want money re-allocated TO ME, not AWAY FROM ME. I will be irresponsible. I'll lie. I will fuck you over to get mine.

This is a great country.

OK, I said earlier I would end with an illustration of almost ridiculous self-indulgence. It comes from the owners of Pomegranate, the failed downtown crap-O-torium. This woman is still blogging, and still just oblivious as shit to the World around her. Check this out:

End of a dream (or two or three)

I miss Merenda. We would have gone there a few weeks ago after closing the doors on our own downtown shop for the last time. Instead, we went home and made a nice little dinner, sat in our pjs, and drank some champagne... to soothe our souls.

Truth is, we hardly ever (never) go out to dinner anymore, which makes us part of the problem for restaurants. It's endemic, this economic situation. Call it trickle down (too lite), ripple effect (better) or smashing tidal wave (apt), but it has affected everyone in one way or another.

When I lived in San Francisco some time ago (and please, no one needs to send an anonymous comment about Califungos [sic: Cali-Bangers]) I used to frequent the wonderful Farmer's Market at Ferry Plaza, just like I frequent our wonderful Farmer's Market at Mirror Pond here in Bend.

Back then, the Ferry building wasn't yet refurbished into the foodie heaven it is now, but once a month or so, local restaurants would set up tented booths and cook up a storm for shoppers. At that time, Jody Denton owned Lulu's (south of Market area), one of the restaurants represented at the market. I didn't know him then, but clearly remember standing in line for a soft shell crab sandwich, and going crazy over the amazing taste and texture of it. A bunch of people around me announced (to no one in particular) that it was so good they were getting back in line to get another one.

Sometimes a meal is memorable like that, even if it's eaten standing up in a converted parking lot with seagulls and pigeons swooping around, hoping for a bite. We were happy when Merenda opened. It was hugely ambitious, and all the buzz about how it could sustain itself seemed to dissipate when year after year, it just kept succeeding.

Until the financial crash. I really liked going there, and maybe this post is more about post-mortem support than anything else, but some of the blog posts I've read bothered me in their analysis of why they went down.

Truth is, everyone has a different experience at different restaurants, and some of it depends on the day, time of day, mood of the servers, who's cooking, and who's sitting next to you. There are lots of good restaurants here, and you'll get a different critique of them from everyone you talk to. And no observer will really know the details of why a restaurant – or any business – falls apart.

All I know is the restaurant business has to be a crazy scary venture: more intense and problematic and potentially disastrous than anything you can do in retail. I'm glad another group is giving it a go: the space is fabulous and, I think, the anchor of downtown. It's good that some of the Merenda employees are going to get their jobs back.

And I'm glad that Jody has another job lined up in Sydney. But I'm very sad that they had to go bankrupt in the process. No one wants to see that for a young family. Or anybody. We were there on their last night, and I shed a few tears as we left (oh yeah, lots of raw emotion these last few months).

Jody and Michelle are sure to land on their feet again, and the restaurant will reincarnate itself (empty spaces downtown will get filled: it will just be different).

It just hit me as the end of a dream, a vision. Not just theirs, but ours as well (knowing we'd be soon closing our downtown location), and soon, others. This is what I crave right now: that lemon rotisserie chicken. Maybe with an indulgent side of tempura green beans, followed up with an order of insanely delicious beignets. Call the medics.

I mean, this gal sounds like she's very nice. But, if you read this post closely, and in the context of someone who has just Closed Down A Failed Luxury Handbag Shop, you just have to wonder What The Fuck Is She Thinking?

She even has the barest self-awareness to know that Cali-Bangers are the most LOATHED species on Earth. But even so, she almost defines Happiness by the Quality of Her Consumption. I almost feel bad for this person. How many authentic moments has she had in her life? I mean she describes herself as a "Shopping Monkey" on her blog.

It's actually just sad. And still, she is probably almost broke, and all she can do is reminisce about consuming. And you see this as a common thread in almost everything listed on BendBlogs.com. 95% of all posts are of an almost completely selfish nature: "Why I like/eat/do/dislike/buy/avoid/think about 'X'".

Well, I better wrap this up, so hbm can take a nappy pie.

I love deflation! My back is killing me!

Outrage Exhaustion

I think Dunc used the phrase "Outrage Exhaustion" a few weeks back in the comments to describe the nature of the comments. He just had an entry on Pegasus that there were only 200+ comments over here. I guess I think that's a little funny; I don't know of any local blogs that get that many, but c'est la vie.

But that's probably how this thing will end, especially locally. With a whimper, not a scream.

People will just slowly mentally succumb to this thing. All the Merenda replacing will have failed. The hottest spot in the hottest town in the West will just be laughable. That Subway will probably hold on by it's fingernails, maybe. But the hoity-toity stuff will all go down hard, and finally no one will step up to replace it.

I even think the Old Mill will suffer a long-term erosion. Some big anchors will close. The Money Losing Trophy Property (MoLo TroPro) concept will die a certain death, and that's much of what's there. I can't see REI staying. Greg's Grill gone. Yumm Cafe, Alisons Kitchen, Community Flatbread... all gone.

And there are no jobs here. The nationwide unemployment rate came out this week at 7.6%. As recently as September, we were at 6.0% nationwide, and it appeared things were stabilizing.

No more. This is a statistic that hardly moves one way or another more than .2% in any given month. It's gone up an average of .5% for the last 3 months. Doesn't sound like much, but I haven't seen any similar period in modern history where unemployment has moved so much, up or down.

And here's a graph of recent unemployment figures for the USA, Oregon, and Bend. You don't have to be Kreskin to see where Bend is going.

Unemployment for USA, Oregon, and Bend; Jul 2008 to present.

I mean, look at that; you tell me where you think it's going. The top of that graph is 14%, and if Oregon stays in it's ways of outpacing the nation by almost double, and Bend outpaces Oregon by 50%, it seems like a slam Dunc that we'll hit 15% for this month. 13% for January seems also within reason.

Towns with 15-20% unemployment are just not vital hubs of commerce. Towns like that are usually in long term decline. Those are your little towns out 30-40 miles SW of Missoula or somewhere (ie Burns), that are just in a secular decline. Outdoor mecca? Beautiful? Nice to visit? Oh yeah, all that. But in long term decline nonetheless.

I saw many towns like this on my last vacation. Beautiful spots. Outdoor activities out the ying yang. I had a great time there too. But get on the outskirts, and it was all decay, rot, malaise, and abandoned malls. You could see it on people's faces, they were in existence mode, just surviving day to day.

Not dying, mind you. There was just this perceptible resignation to a fate that had no chance of any "upside". No excitement, no challenges. People had stopped that, because the remnants of failure were all around them.

I think Dunc had it right: The "excitement" of the decline will be replaced by a real sort of despair that things aren't EVER going to bounce right back. We will become like so many other places in the West: Beautiful, activity-rich, but caught in a molasses-like, moribund economic spiral downward.

And I'm not trying to "drag people down" to my way of thinking, or some such bullshit. I'm trying to talk people out of economic suicide. On the slopes of Everest, when Common Sense Caution is not heeded, people die. It's not so dramatic here. Well, except for the people who have died. My point is, the signs are all around us: STOP THE CLIMB.

Many are still not heeding the advice of the environment around them. Everything points to white-out, 100 below, killer conditions; but still people start to climb.

Why is Merenda II even being considered? Why? Because what killed the last guy, won't kill me. I'm better than him. I'll make it. This. Is. Bend.

It's really incredible. Pahlisch Homes has watched as their subdiv's have imploded (from BendBB):
Just noticed today that all Pahlisch signage has been removed from the Fieldstone Crossing development in Redmond. Looks like their model has been shut down completely. Their is no reference to Fieldstone Crossing on the Pahlisch website.

And yet Pahlish announced they have started building The Bridges At Shadow Glen this week.

Ahhh... the power of LLC's. Failure is not an option.

Even our public servants have jumped on the Bubble Bandwagon.

Bend police captain on leave amid FBI probe

Bend Police Capt. Kevin Sawyer has been placed on administrative leave as the FBI investigates one or more businesses Sawyer and wife Tami have been operating, the police chief confirmed Friday. "I am aware of an investigation going on by the FBI into the finances of a business or businesses that Captain Sawyer is associated with,"said Police Chief Sandi Baxter.

And so it goes. Everyday, we seem to find someone with their twig & berries exposed as the tide rushes out. First Summit, now this guy, and there are, like an iceberg, many others that we aren't even hearing about.

The relentlessness of the pain, the disbelief of the corruption, the resignation that we can't beat The Powers That Be, will finally be the nail in Bend's coffin. There won't be anymore excitement, no more challenges. People's outrage will succumb to despondency. We'll all just give up on this place.

Outrage Exhaustion. Great description. Because the vast majority of people in this town will realize at some point that there is an existing "Aristocracy" of sorts (GOB Network), and if you are not part of it, and you have Big Dreams for your life, that you will Not Make It In Bend. This is Not a meritocracy. Things are NOT done "for the People". They are done for a small inbred cadre of well-defined beneficiaries who rig every election.

That's how it is in Bend, Oregon.

Not real people. Not real children. Spending NOT real money, from not real jobs, in a not real place.

OK, enough bitching about that. I just have a teeny-tiny outrage against my own kind.

And I have to preface this with the idea that what is trying to be accomplished and the means by which so many think it will be acconomplished, is just sheer folly.

And it is the passage of The Bailout. It's not a bank bailout. Nor autos. Nor any other particular thing. It's a bailout of this country. We are falling into the Abyss.

And strangely enough there is an unassailable mentality that a BAILOUT will save us. OK, governements can produce nothing. Except money, which they can produce in unlimited quantities. And governments many times think the printing of it can cure all ills. Of course, that's ridiculous.

Our problems will not be undone, until housing hits bottom. The bailout, and many other government measures are doing everything possible to avoid that. Forebearance on loans, delaying foreclosures, loan renegotiations. All these are failed ideas, and simply prolong the pain.

And prolonging the pain, is just what the RePug's intend to do. These hypocritical, lying, thieving, conniving fuckers are as much to blame as the Lib's for this thing.

But what's just classic, is that BOTH parties agree that the bailout is our only salvation (ridiculous, of course, it will only make things worse). But even in their idiotic agreement, they have put partisan politics FIRST, and the perceived needs of the American people a distant second.

BOTH parties have done this. Yes hbm, BOTH.

This is indicative of a country in decline. The elected aristocracy could give a fuck about the rank-and-file. Even when they are implementeing the most ass-backwards stupid plans imaginable, partisan wrangling is far more important than saving their own civilization.

The most depressing part of this implosion will NOT be the dire & near-catastrophic economic consequences, it will be the loss of will, the loss of drive, the loss of cause-and-effect thinking that people have, where if they struggle, work hard, and strive against the odds, that they can make something of themselves in this country.

That is what we are losing. We are rewarding FAILURE, EXCESS and EXTRAVAGANCE, and punishing prudence, thrift, and spending within your means. We're sending a message here with this bailout: Graft, corruption, and theft will be rewarded.

We are a nation in decline.

OK, finally I want to do a little re-print of an MSN article. It's got good info, but I suppose the big shocker is that mainstream press is starting to use The D Word. There is actually starting to be an open debate about whether a modern-ear Depression is possible. Maybe you & I are getting a tin-ear to this, because I have been banging this drum for 2 years.

But you could NEVER find mainstream press even discussing it. NEVER. Until now.

THAT is how BAD it is. All the hopeful sentiment that we are about to bottom imminently, has been replaced by How Low Can We Go? I think the past 60 days have been a wakeup call.

Too late to avoid a depression?

Policymakers are quickly running out of time and room for error. And even a brilliant plan -- which we haven't seen yet -- could fail without some good luck.
By Jon Markman

Over the past week, the world's intellectual, business, government and philanthropic elite emerged from World Economic Forum meetings in Davos, Switzerland, with grim faces and warnings of financial doom.

You'd almost think they'd met to plot a suicide pact rather than global trade, as the headlines were so gory they could have been mulched into meals for vampires. Are things really that bad? Maybe not.

Your contrarian antennae really have to go up in the face of consensus from a cohort of eggheads, politicos and jet-setters not exactly known for clairvoyance. Their big idea last year: that emerging markets' domestic economies had become so strong that a decline in U.S. and European growth would not derail them. Oops.

Credible economic analysts now say there is still a narrow window of time in which policymakers in the United States, Europe and Asia can avoid a meltdown over the next year by immediately coordinating the injection of real financial adrenaline to banks, companies, households and local governments -- not just rhetoric and indiscriminate spending.

Yet that window is closing fast, and if the right steps are not taken soon it may be shut for years. But governments don't know which steps work because economic theory breaks down at the level of human psychology.

Given a set of stimuli -- ranging from tax cuts and longer unemployment benefits to new construction jobs and wider broadband access -- economists try to mathematically determine the choices citizens are likely to make, then use the results to recommend a policy mix to legislators.

The problem is that the models often fail to accurately forecast human behavior, and politicians regularly screw it all up by ignoring the data and diverting funds to pet projects.

History is rife with successful financial episodes, such as the New Deal, in which luck and coincidence are later misinterpreted as results of prescient planning. Slim hopes of an end-zone dance To prove the Davos set wrong, in short, congressional leaders must make the right choices at warp speed under pressure from special interests.

It's a public-policy version of the Steelers' final drive Sunday with time running out in the Super Bowl. Pittsburgh quarterback Ben Roethlisberger, scrambling to elude a rush, had one good shot at throwing the football at an oblique angle to a receiver leaping among three defenders in the corner of the end zone.

In times like these, the result set is stark and binary: hero or goat in football, recovery or disaster in the economy. The Davos pessimists' case for a severe economic dislocation over the next year -- let's go out to the extreme and call it a potential depression -- is easily made, as four key ingredients are in place.

Their recipe calls for a blend of cyclical recession, severe deleveraging, a shift of demographics favoring savings over consumption, and inappropriate fiscal and monetary responses by policymakers. The first three are well under way, so the last one is the decider.

Looking back at the Great Depression of the 1930s and Japan's depression of the 1990s, it's clear that government leaders in each case failed to respond quickly enough, then overcorrected, and in general took steps that at the time were considered best economic practices but actually worsened the problems.

Our leaders will likewise now try to do the right thing based on currently popular theories, but we cannot confidently say whether they will turn out to be appropriate.

You just never know.

The only certainty is that measures must be taken immediately, and every day lost on minutiae such as bank executives' pay or Cabinet nominees' tax follies dampens the likelihood of success. Speed is of the essence, like putting up sandbags to stop a levee break, as we can see in daily headlines now that the darkness of Davos is descending.

The incredible shrinking economies Layoff announcements over the past three months averaged 50,000 a week until they jumped to more than 100,000 last week. In an attempt to outrun revenue shortfalls, businesses are also cutting back on wages, travel and equipment purchases.

But it's a losing battle. ISI Group analysts figure that U.S. corporate profits will decline from their 2007 peak to a 2010 trough by a record 30%, though a 50% fall is not out of the question. They're already down 20%. Customers are disappearing as wages and jobs falter and families raid their emergency funds. U.S. home equity decline has accelerated to a 30% annual rate, which combined with the stock market plunge, has slashed consumers' net worth by $12 trillion.

The pervasiveness of the plunge in demand that animates doomsayers is breathtaking. Reis, a real-estate research firm, this week said rents nationwide fell in 43% of buildings of all types in the fourth quarter, up from an average of 25% in the first nine months of the year. In New York, where financial layoffs are surging, rents fell in 75% of apartment buildings last quarter. This puts securitized loans on U.S. commercial and apartment buildings on track for a default rate of 6% this year, up from 1.1% at the end of 2008.

"We haven't seen this speed of decline before," one Reis analyst told Bloomberg. In Asia, the momentum of deterioration and thus the need for policy speed is even more dramatic. Japan's industrial production is falling at a stunning 63% annual rate; in South Korea, it's falling at a 43% rate.

In China, real gross domestic production was unchanged in the fourth quarter, and ISI analysts expect it to be unchanged in this quarter, which would smash the GDP growth down to just 4% year over year, a stunning comedown for an economy that was growing at better than 10% last year and was once believed to be invulnerable.

In contrast, government leaders appear to be moving in slow motion. The Federal Reserve last week said it was "prepared" to buy Treasurys to push down interest-rate costs even though 10-year-note yields are up a lot in the past two months.

The Obama administration, meanwhile, has dawdled on plans to try to recapitalize the banking system or buy soured assets, and the fiscal stimulus package winding its way through Congress appears by independent estimates to be too small, insufficiently focused on real job creation and overly weighted on fiscal 2010 rather than 2009.

Meanwhile, the head of the European Central Bank is dragging his feet, stating that he would not back an interest-rate cut. I would love to see the smug Davos crowd proved wrong, but the forces at work may have gone too far to be stopped. The nation may be on track now to spend $4 trillion -- more than on anything short of war -- to prevent the credit hole from getting so big we can't climb out.

It's especially worrisome to see so much money used to shore up the worst-managed banks, a misallocation of resources that could haunt us for decades. In summary, total ruin can be averted and the Davos prophecy squelched if lawmakers seize the moment, aim true and get lucky.

Even if the result is low growth amid a newly chastened business and social culture, re-ranking of national priorities to celebrate saving over consumption and acceptance of a lower stature in the world, it's superior to depression and chaos.

Cross your fingers.

Oh right, I did want to let you guys in on a little secret: I was one of the attending physicians when Thomas Beatie gave birth to the first goat-human. There's been quite a bit of consternation about how someone could possibly push a goat out through their cock. I am here to tell you that after I, and assisting physician Neil Patrick Harris (aka Doogie Howser, MD) crammed a giant metal spear into that bastards cock, the end result was not pretty:

Asshole: The Other Pussy

I also want to address the delicate topic of where a man holds a baby goat. It's not in the belly, it's quite a bit lower. Here is a never-before-seen picture of Beatie posing completely naked, just prior to birth:

"Hi, I'm Thomas Beatie and there's a mother fuckin' goat in my nutsack! I'm calling Oprah!"

OK, I'll wrap it up by throwing Dunc a Betty Boop Pinup bone'r two here:

Please Dunc, don't hurt me!Dunc, I'm hankerin' for some spankerin'!

And squat, and thrust, and in and out!I wish someone would go apeshit on me right about now...

I wish there was a big strong Comic book retailer here to help me pet my pussy...

I'll give you this Dunc, She Hot. If I was born during the Civil War, I'd also find this 1930's style porno pretty hot. There ain't many chicks that look bad in a ball gag.

Cascade Bancorp Seized By Regulators

I think one commenter put it best, we're seeing "The End of Days".

Over 2 years ago, when I picked up BEM's mantle, and started this blog, I only knew a few things:

• We were at or near the top of the biggest Bubble of all time
• Bend was one of the most heavily participating cities in the country
• It would all end badly

But a lot of people like OR economist Tim Duy were still saying that things "could be" OK, or they might not be completely "OK", but there will be nothing catastrophic.

But I think the World is coming around to this blog & it's commenters way of thinking, that this thing is going to be disastrous. That this thing will redefine Moore's Law, and everything that can go wrong will go horribly wrong. And a whole bunch of stuff we never even thought about in the early days, will also go wrong.

Because if there is one thing we're all learning, implosions don't go "according to plan". "Project Management" won't help you during a catastrophe. Neither will Positive Thinking. In fact, positive thinking which leads to positive action can hurt you BADLY in many ways in our current circumstances.

And of course, that is exactly what we are seeing. Jay Audia being a prime example, among others. THIS is Not the time to be "Optimistic". We've got a ways to go.

And from the headline, you can see I've "taken a page" from The Bulletin, and put a somewhat misleading headline on this weeks post. Well, sorta, kinda. As the Bulletin always does. We will see CACB seized by bank regulators, sooner or later. NOW is the time to extract your funds. NOW.

CACB, 5 days

CACB is finally having it's Day of Reckoning; a time when we all realize that this Big Behemoth that represents our Diabolical Corporate Levaithan, is really just a decent sized fish in a very, Very small pond. CACB, while Big To Bendites, is Dogshit on a Shingle to the rest of the World, and the banking federales will have no compunction about swooping in and closing this beast one lovely Friday Morning.

In fact this past Friday, the FDIC saw fit to close 3 middling banks, but there was one point of interest in these closures: When shuttering the Magnet Bank in Salt Lake City, the FDIC found itself unable to find anyone willing to simply assume this business:

Utah's MagnetBank closed without an acquirer

FDIC shuts down three banks in one day amid ongoing credit crisis
By John Letzing, MarketWatch
Last update: 6:42 p.m. EST Jan. 30, 2009

SAN FRANCISCO (MarketWatch) -- Federal regulators closed three banks in a single day Friday, as the ongoing credit crisis showed no signs of abating.

Utah's MagnetBank became the fourth bank failure of the year, and the Federal Deposit Insurance Corp. was forced to directly refund depositors after being unable to find another institution willing to take over its operations.

That marked the first time the FDIC has been unable to find an acquirer for a failed bank in nearly five years, according to FDIC spokesman David Barr. "This bank did not have an attractive franchise value, and not many retail deposits or core deposits," Barr said. The FDIC had conducted an extensive marketing process for the bank's assets, he said.

Salt Lake City-based MagnetBank had total assets of $292.9 million as of Dec. 2, and
$282.8 million in total deposits. "It is estimated that the bank did not have any uninsured funds," the FDIC said in a statement.

The FDIC later said it has also closed Maryland-based Suburban Federal Savings Bank, and Florida's Ocala National Bank.

Suburban Federal had total assets of roughly $360 million as of Sep. 30, and total deposits of $302 million, the FDIC said in a statement. Tappahannock, Va.-based Bank of Essex agreed to assume all of the failed bank's deposits, the FDIC said.

Ocala National had $223.5 million in total assets as of Dec. 31, and $205.2 million in total deposits, the FDIC said. Winter Haven, Fla.-based CenterState Bank has agreed to assume all of the failed bank's deposits.

The closures mark the fourth, fifth and sixth bank failures of 2009, bringing the total to 31 since the start of the credit crisis.

The FDIC can almost always find someone willing to take over a banks operations. Almost Always. It's like getting the customers for free. All the bad stuff is wiped out. You just get a whole bunch of customers for almost nothing, and since they are free, you can cherry-pick and get rid of the crap, by imposing onerous fees, etc.

What will be interesting to see, is if they can find a buyer for poor, sad little Cracker Ass Cracker Broke. Let's face it, CACB does have a decent presence in this dust-ridden shithole. But that's about it. What we're seeing with Magnet Bank in UT is just the beginning; banking seems to be a business model that is again on the brink of complete failure.

We saw this in the early 90's. Of course, we saw it en masse during the Depression. Banking is a business model that simply is compelled to undo itself.

To become big, you must take risks & leverage to the hilt. You must participate in the bubble du jour, you must. Or you won't get big. But once the soup goes cold, you face calamitous implosion. And you are once again a nobody.

Unless. Unless you can convince someone that you are Too Big To Fail. Then you receive Corporate Welfare, your corpse has new life breathed into it, and you go on your merry way, doing as you've done before, driven towards ever-larger temporary Bubble-fueled successes and subsequent Taxpayer-fueled failure-bailouts. Always becoming Ever Too Big To Fail.

Which is where we are writ large. We've done this so often with banks, that it has now spread to autos. But NOT one auto maker. It's the industry that is failing. Like banks. It's the whole edifice that is crumbling. We can't move to another part of the cliff face & be safe, the whole thing is crumbling.

And so shall pass our "Civilization". America. This crazy 200+ year experiment seems to be itself collapsing. Like Krugman says: This isn't cyclical, this is structural. There is a fundamental flaw that seems to have rendered Unbridled Capitalism as a system with no fundamental equilibrium point. The pendulum swings. But the force of the feedback mechanism (Greed) is rendering the entire structure supporting the pendulum, unstable.

We've exceeded the engineering specs of capitalism. hbm may be right: Unbridled capitalism undoes itself. This got me to reading Marx:

Political economy

Marx argued that this alienation of human work (and resulting commodity fetishism) functions precisely as the defining feature of capitalism. Prior to capitalism, markets existed in Europe where producers and merchants bought and sold commodities. According to Marx, a capitalist mode of production developed in Europe when labor itself became a commodity—when peasants became free to sell their own labor-power, and needed to do so because they no longer possessed their own land. People sell their labor-power when they accept compensation in return for whatever work they do in a given period of time (in other words, they are not selling the product of their labor, but their capacity to work). In return for selling their labor power they receive money, which allows them to survive. Those who must sell their labor power are "proletarians". The person who buys the labor power, generally someone who does own the land and technology to produce, is a "capitalist" or "bourgeois". The proletarians inevitably outnumber the capitalists.

Marx distinguished industrial capitalists from merchant capitalists. Merchants buy goods in one market and sell them in another. Since the laws of supply and demand operate within given markets, a difference often exists between the price of a commodity in one market and another. Merchants, then, practise arbitrage, and hope to capture the difference between these two markets. According to Marx, capitalists, on the other hand, take advantage of the difference between the labor market and the market for whatever commodity is produced by the capitalist. Marx observed that in practically every successful industry input unit-costs are lower than output unit-prices. Marx called the difference "surplus value" and argued that this surplus value had its source in surplus labour, the difference between what it costs to keep workers alive and what they can produce.

Capitalism is capable of tremendous growth because the capitalist can, and has an incentive to, reinvest profits in new technologies and capital equipment. Marx considered the capitalist class to be the most revolutionary in history, because it constantly improved the means of production. But Marx argued that capitalism was prone to periodic crises. He suggested that over time, capitalists would invest more and more in new technologies, and less and less in labor. Since Marx believed that surplus value appropriated from labor is the source of profits, he concluded that the rate of profit would fall even as the economy grew. When the rate of profit falls below a certain point, the result would be a recession or depression in which certain sectors of the economy would collapse. Marx thought that during such a crisis the price of labor would also fall, and eventually make possible the investment in new technologies and the growth of new sectors of the economy.

Marx believed that increasingly severe crises would punctuate this cycle of growth, collapse, and more growth. Moreover, he believed that the long-term consequence of this process was necessarily the enrichment and empowerment of the capitalist class and the impoverishment of the proletariat. He believed that were the proletariat to seize the means of production, they would encourage social relations that would benefit everyone equally, and a system of production less vulnerable to periodic crises. In general, Marx thought that peaceful negotiation of this problem was impracticable, and that a massive well-organized violent revolution would be required, because the ruling class would not give up power without struggle. He theorized that to establish the socialist system, a dictatorship of the proletariat - a period where the needs of the working-class, not of capital, will be the common deciding factor - must be created on a temporary basis. As he wrote in his "Critique of the Gotha Program", "between capitalist and communist society there lies the period of the revolutionary transformation of the one into the other. Corresponding to this is also a political transition period in which the state can be nothing but the revolutionary dictatorship of the proletariat."[24] While he allowed for the possibility of peaceful transition in some countries with strong democratic institutional structures (such as Britain, the US and the Netherlands), he suggested that in other countries with strong centralized state-oriented traditions, like France and Germany, the "lever of our revolution must be force."[25]

Marx has a fairly compelling arguments here. The decline of Unions, the rise of vast capitalist fortunes. A lot seems to be going according to Marxist plans here.

But there is one problem with the Marxist thought of 150 years ago, and today: We have lowered the barrier to capitalist entry so low, that everyone is a Capitalist Proletariat.

Realtors. Graphic Designers. Web engineers. Even traditional employees. How many people do you know who have held their current position over 10 years? I never have.

Marx said that politicos & proletarians would ultimately revolt against capitalism. But who do we revolt against? The division is so unclear, that like a terrorist cell, it's hard to figure out who the enemy really is.

So we are headed towards something. I almost feel a sense of melancholy, watching as my beloved Capitalism dies a slow torturous death. Will it arise someday for my kids? Maybe. But it seems clear to me, that during the remainder of my working productive years, something will take its place.

I don't think it will be straight up Marxist Communism. But it will be governmentally managed. The Invisible Hand will be cuffed. We'll become more like Italy or (gag) France. We'll bleed the patient with leeches to ensure This Never Happens Again. Cure worse than the disease, as is the way in circumstances like this.

Nobody told me there'd be days like these
Nobody told me there'd be days like these
Nobody told me there'd be days like these
Strange days indeed, strange days indeed

... most peculiar mama

Moving on....

I've found myself headed towards the business listings on craiglist. The Bulletin will not tell us The Bad News of small and middling businesses closing, and so we have to rely on the businesses themselves. And many will either come right out and tell you that they are closing their doors:

The Children's Boutique on Kearney Ave is going out of business!

everything is for sale, even the fixtures.

I have two cash registers, credit card machines, slatwall, tagging supplies and more.
come by and see what we have. Last day Feb 10th

The Children's Boutique
325 ne Kearney
(across from Taco Bell)

385-1168

Or you can sift through the vast picked-over carcasses of your favorite ex-retailer. There's a lot of stuff there. If you have a urgent fundamental need, you can get pretty good deals there. Not great, cuz after all, This Is Bend.

But people like Dunc, and other survivors can outfit the current shop at fairly decent prices.

Of course I raise my usual caveat: Don't Buy Anything Unless You Absolutely Have To. We are in what Krugman calls a deflationary spiral. Cash is becoming worth more, the stuff we bought on the way up like homes, cars, fake titties, Hummers, Volo, City Council Seats, CACB shares, botox, and the rest is becoming worth-less. OK, I can't resist re-prodicing a short reprint of Krugmans Dead On Analysis:

Nobel economist: 'Not your father's recession'

Krugman has a recurring economic nightmare involving a syndrome called a deflationary trap, something that could conceivably last a decade. "This has me very frightened," he says, "and it's just starting to get under way."

Deflation, the opposite of inflation, means that prices fall -- which might strike shoppers as a good deal. But as prices drop, consumers hold onto their money in hopes of even better bargains.

Reduced demand sends prices lower, triggering a downward spiral as factories close, employment shrinks and loans default. Pay cuts mean that homeowners, who thought rising incomes would reduce the bite of their mortgages, instead see their house payments effectively increase, boosting their debt load.

Japan suffered a lost decade or more to deflation after its 1980s economic bubble burst. Krugman says the current recession has disturbing parallels.

During Inflation, your money becomes worth-less, and so it is best employed in real goods. Holding cash simply impoverishes you. Deflation is the opposite: Holding onto your money and not spending it increases your wealth. It is the unfortunate side-effects that collapse the economy.

And spending DOES NOT REVERSE THE PROCESS. Same as holding cash during inflation doesn't STICK IT TO THE MAN or some such. You can't "reverse" deflation by spending. It's not an Entity, it's a state.

This brings me to my final thought: BEDROCK. Seems like people are starting to wonder if there is a "base" to this collapse. Is there a bottom. Will we ever stop falling?

I guess Great Minds Think Alike as Dunc had a recent post on this topic:

It's the psychology, stupid.

To follow up on the previous post, I'm starting to look at the psychology of the consumer again.

While I wouldn't put in the dire terms that Buster put in the comments, there is a fine line between having a wounded consumer and a mortally wounded consumer. To my mind, it's better to be informed and skeptical, but not panicked.

Last night, I began wondering about all those people who have secure jobs, or relatively secure jobs. This is probably the majority, even the vast majority of consumers.

But they've cut back, nevertheless. It's a natural response. But most of them are still coming in and getting their favorite comics, or buying a book, or pulling the trigger for a toy that wows them.

What would be very dangerous is if they didn't just cut back, but stopped spending altogether.

I think that's what all the stimulus package talk is all about. Maybe Buster is right, and little of it will reach Bend in truth. But as long as the 'impression' is out there that SOMETHING is being done, I believe that the consumer will continue to be careful, but not stop altogether.

Obama is a plus, because he holds out the potential for improvement. The stimulus package is a plus, because it looks as though something is being done. The bail-out -- god help me -- is a plus, at least psychologically -- because it keeps the Big Bank Fails headlines out of the paper.

On street level, I saw the immediate impact of Bears, Sterns going down. Then the even bigger impact of Lehman brothers, and Bernie Madoff was the nail. I suppose, Murphy being a tricky bastard, that I should expect at least one more real eye-opener, and hope the psychology doesn't turn permanently bearish.

The underlying conditions are stark, but I can deal with them as long as there isn't another total shift in psychology.

People will start asking this question: What is Bedrock in the American Economy? Where is the bottom? What is fake & what is real? For every Madoff, how many non-shysters are there? Are there any? Is Buffett real? Who can I trust? Can I trust anyone ever again?

Where's the Bedrock? There IS Bedrock in this country. OK, I sound pretty alarmist on here, I know. It's in large part because we are collectively being over-pacified by the local media, and someone needs to don some clapboards to raise awareness.

But even in a place like Bend, people have to eat, they need to sleep largely under a roof, they need clothes. There is a ROCK BOTTOM here. I don't think we'll end up like Fossil or worse.

But where is The Bottom? I don't know folks, but it seems to be that those who went up the most will fall the farthest. And No Where Went Up Farther And Faster Than Bend Oregon. No Where. And we've already seen that things are far worse than anyone thought possible even 1 year ago. A year ago McPain had a chance.

So when I and others in the comments talk about this town going back to 40-50,000 people, homes reverting back to $125K, and unemployment going to 20-25% (or more), this isn't panic-mongering; its just a reversion to Bends Bedrock. Its base. A place where people eat, drive, dress, work and otherwise live simply. It's not bad. It's our bedrock.

I'll end with a Bully piece about how bad this is already for select locals. And remember: This is the price we are paying for having as a community CHOSEN to have a 24 month unbridled Greed-fest primarily for those at the very top of our local socio-economic stratum. This is it. The hangover will affect everyone and will linger for a decade or longer. Was it worth it?

Meet the people behind the numbers

By Story by Lauren Dake Photos by Pete Erickson / The Bulletin
Published: February 01. 2009 4:00AM PST

Department of Human Services employees say they’ve never seen anything like it. Every month, the number of people seeking assistance rises. In December, 10,636 families in Central Oregon received food stamps. Statewide, they are calling it an emergency. But in Central Oregon, they are looking for an even stronger word. With a 29.5 percent increase in families receiving food stamps in December compared with December 2007, the tri-county area is the hardest hit in the state, when measured by the increased request for food stamps. Many families and individuals are seeking help for the first time in their lives, others are finding they need more. Below, a few of those people agreed to share their stories.

Jeff Johnson

Jeff Johnson’s chicken Parmesan dinner expired 22 days ago.

In about a month’s time, he went from buying fresh foods at the grocery store to getting free, slightly expired food.

A recent divorce came at a time when the 45-year-old, self-employed residential and excavation construction worker was experiencing slow times.

The Bend resident went from living in a 2,552-square foot, five-bedroom, three-bathroom home on 40 acres, to a 35-foot fifth-wheeler in his church’s parking lot.

Now, the man who lives in a $42,000, 2006 Weekend Warrior, which he bought with visions of traveling the state with his family, is answering questions he never dreamed someone would ask him.

“How are you meeting your basic needs?” asked Department of Human Services employee Sue McDonald — a stranger to Johnson.

His face flushed, Johnson shared the story of his first visit to the food bank, of living behind his church, of borrowing $20,000 from his parents.

“Do you have any income?” she asked. The answer was no.

She asks about assets.

“It’s kind of hard driving a 2006 Chevy pickup to a food bank,” he said.

He tried for military benefits but was told by officials in the Veterans’ Affairs office he was 33 days short of continuous active duty to qualify.

On Wednesday, he decided he needed more help than he could get from the food bank and applied for state assistance for the first time in his life.

McDonald gave him a list of resources, places to go for transitional housing, for clothes, for extra food.

“Food stamps weren’t intended to carry anyone through today’s economy,” McDonald told him. “They don’t last a month.”

In 2006, Johnson’s gross annual income was $170,000. His house, then appraised at nearly $1.2 million, was $70,000 away from being paid off.

“There have been slow stretches during the last couple of winters,” Johnson said. “But not like this. This is just incredible.”

It’s an odd feeling, Johnson said, to own expensive goods that aren’t worth anything. He tried selling his tools at Trade-N-Tools, where you can trade tools for money. But he quickly found out he wasn’t the first one with the idea; the place was inundated, he said.

He was never irresponsible with money. He planned ahead. He had a savings account, but that was wiped out by lawyer’s fees.

His parents, who also live in the area, are using their savings to help their son.

“I grew up with parents that never took vacation; we drove a station wagon with a red-front fender. It was all mismatched and had snow tires on it year round,” he said, adding he intends to pay back every dime his parents have given him.

Although Johnson never dreamed he would be in this position, he said, he’s being proactive about surviving. “There’s just no income. I just can’t get any money …” he said. “But it’s easy to find people in worse shape than me.”

Joel Hall

Joel Hall would like to leave Bend — but he can’t.

“There are more job opportunities elsewhere … But I can’t afford leaving,” he said. “The economy’s impact on a small town like this …”

When he first moved to the area, in 2005, 37-year-old Hall worked for the Bend-La Pine School District as a teaching assistant.

He has a bachelor’s degree in education from California State University- San Marcos.

Hall was laid off from that job. He was laid off from Flatbread Pizza. He’s been a bartender but was laid off there as well.

"It was tough five years ago finding a job in this town,” he said. “Now, this town that seemed to explode for a while, it’s just imploded.”

He’s getting by teaching snowboarding a few hours on Mt. Bachelor. But that’s only about two hours a week. And he hasn’t received unemployment benefits yet, because he’s been told it’s a four- to six-week wait.

“In the meantime, there’s no income,” he said while waiting in line for food stamps on Wednesday. He’s dressed in all black, with The North Face sneakers. He’s clutching an issue of National Geographic magazine. “I wouldn’t be standing in this line if that wasn’t the case.”

Hall has moved in with a friend to reduce expenses.

“Thank God I have good friends,” he said. “But they are losing their jobs, too, and they have educations. They are lawyers …”

Maybe, he said, it’s time for a career change.

“I would like to get into a field that can withstand this stuff,” he said, mentioning health care as a possibility.

Wednesday was his first time applying for food stamps.

“I never though there would be this many people here,” he said, after waiting in line for about 40 minutes. “But it seems to be hitting people from all directions.”

Although Hall said he’s determined to stay optimistic and keep his head up, it was a difficult decision for him to visit the DHS office.

“I’m totally embarrassed,” he said. “I didn’t want to come down here and wait in this line. But six weeks with no income … I check Craigslist and the paper all the time. There’s just not much out there.”

Kris Hakkila

As soon as Kris Hakkila, 44, of Bend, noticed his work drying up, he started applying for jobs.

He has yet to hear from anyone. In December alone, he sent out 40 résumés, looking for jobs at flooring manufacturing companies or as a project manager on different jobs — without a single call back.

“Not a thing, not a letter, not a call,” he said. “You just know they are being bombarded with applications.”

And so, on Wednesday, the self-employed hardwood floor contractor applied for food stamps for the first time.

His sentiments echoed many others at the DHS office.

“I’ve been through tough times,” he said. “But never this bad before.”

Along with his wife, who works as an assistant to a financial broker, Hakkila has two daughters, 14 and 17.

“All our money is going to pay our bills,” Hakkila said. “Soon, we’ll have absolutely nothing.”

Two years ago, his business was bringing in around $60,000. He has a job lined up in March, but other than that his income is close to zero.

He’s never even thought of applying for food stamps before. And he waited until there were no other choices.

“You know, it kind of sucks,” he said.

Karen Albert

Nearly every weekday morning, Karen Albert took the Les Schwab Tire Centers shuttle from Prineville to her office at the company’s new headquarters in Bend.

But last Friday, she decided to drive her own car.

An hour into her workday, at 8 a.m. her boss called Albert into an office. The human resource director was waiting.

“They told me they were letting me off due to the economy,” she said.

The 48-year-old didn’t see it coming.

“They told us they were done with layoffs.”

Albert was one of 25 people laid off a couple of weeks ago. Earlier this month, the company also laid off about 25 people.

“I just called my daughter and cried,” Albert said.

Since she drove her own car, she didn’t have to wait until her shift was over for the shuttle to arrive and ride home with her former co-workers.

“That was lucky,” she said. “I’m trying to find the blessings in all of this.”

She drove home and cleaned the house.

“And then I went online and applied for unemployment benefits,” she said.

Albert worked for the tire company — Central Oregon’s second-largest private employer — for five years.

A single mom with no other income, Albert immediately thought of her two children, ages 21 and 19. Her daughter, the oldest, has rheumatoid arthritis. And her youngest, a son, is a wrestler in college.

On Wednesday, Albert sat in the Prineville office filling out an application for the Oregon Health Plan.

“Amy can’t go without medical coverage, and my son is on the wrestling team,” she said. “If I don’t have coverage, I don’t care, but they need to be covered.”

Albert said she’s hoping the insurance coverage will be the only assistance she needs.

“I was raised in a family where you don’t ask for help. You take care of yourself,” Albert said. “So it’s rather humiliating. But you do what you have to do to take care of your family.”

Mona Meeds

Mona Meeds didn’t want her children to know.

But she mentioned food stamps while speaking to her husband, and her children heard.

“I didn’t want them to be embarrassed,” said the 31-year-old mother of four.

“If I hadn’t mentioned the Oregon Trail card, they wouldn’t know,” she said.

The Oregon Trail card is a debit-like card that makes food stamps available electronically.

When it became harder and harder for her husband, who owns his own heating and cooling business, to find work, Meeds knew she had to apply for help.

“The work just isn’t there,” she said. “During the housing boom, there was so much work.”

She applied for food stamps and signed her children up for the free and reduced-lunch program.

Without the aid, she’s not sure what would happen. Savings are gone, and her husband continues to take jobs farther and farther away from Prineville.

Even though she is constantly on the move, picking up and dropping off her children, ages 5, 11, 14 and 15, she applied for a job at Rite-Aid.

“It’s the only job I’ve seen posted,” Meeds said. “But they didn’t call.”

Four years ago, the family built a home and had money in the bank.

“Now, I try not to think about it,” she said.

Her children took the news well.

“I told them Dad doesn’t have much work and we’re getting assistance. When it gets better, we’ll get off of it,” she said.

With Crook County’s unemployment rate recently reaching 14 percent, Meeds said her children took it well, in part because they are familiar with tough times.

“They took it better than I thought,” she said. “They have a lot of friends that are having hard times too.”

Keshia Yaw

Keshia Yaw sat in the Department of Human Services office in Madras on Wednesday, waiting for her mother to pick her up.

“I know what I’m going to do,” said the 18-year-old single mom from Warm Springs. “I’m going to find a job, work on scholarship forms, get re-accepted to COCC (Central Oregon Community College) and transfer to Portland State.”

Maybe, she said, she would study something in the medical field.

Although, she doesn’t like asking for help, Wednesday was the first step in realizing her goals.

A blue folder, full of information, was on the table in front of her. Inside was information on how to receive cash assistance from a program called Temporary Assistance for Needy Families. The cash grants are $647 a month for families of four that earn less than $795 a month and have less than $2,500 in assets.

More than money, she’s hoping the program will help her get a job. The goal of the temporary assistance program is to create self-sufficiency for participants. To receive benefits, job searches are mandatory. And the individual must participate in the services available — such as job training classes that help with résumés.

Yaw lives with her mom, who receives food stamps and disability. She doesn’t have her driver’s license. It was too expensive, so any job needs to be near home.

“I don’t like it, depending on other people,” she said.

Yaw wasn’t the only young face at the Madras DHS office on Wednesday. Vicky Higgins, the operations manager, said her office serves a large teenage population.

In 2007, the office helped nearly 40 homeless teenagers.

“The biggest increase is those people who have never asked before,” Higgins said. “But the teen population is really increasing, too.”

Basilio Gomez

For the past 12 years, Basilio Gomez has worked at Bright Wood, in Madras.

He’s no stranger to the economy impacting the hours he works.

When times are good, the forklift driver is guaranteed 40-hour workweeks at the wood remanufacturing company. But lately it’s impossible to work enough hours to support his wife and four children.

On Wednesday, the 44-year-old applied for more food stamps and filled out the paperwork to put his two older children, ages 12 and 11, on the Oregon Health Plan.

The younger two children are already covered through the plan.

He has insurance through the wood manufacturing company, but the deductible is too high.

“It’s bad this year,” Gomez said.

Jaimie and Dave Crockett

Since September, Jaimie Crockett, 25, of Jefferson County, has been taking her résumé to any grocery store and gas station she can drive to.

“I’m trying to find anything,” she said.

Her husband, Dave, 36, was demoted from a salaried to hourly position at Bright Wood, Central Oregon’s third-largest private employer. During a recent week, he only worked 16 hours. He’s been with the company for 14 years.

The couple waited Wednesday in the lobby of the DHS office in Madras for an appointment with a caseworker, who will explain how to apply for food stamps.

Dave never imagined it would come to this point.

“A couple of years we went through this at Bright Wood,” he said. “But that was for a month.”

The couple has two daughters, ages 7 and 2.

“This is horrible,” Dave said. “I’ve never had to ask for help for anything.”

In September, Dave was bringing home about $3,000 a month. The money went to house payments and groceries. Last month, his income was $1,000.

Although Jaimie doesn’t like it, she has an easier time asking for help.

“I’m willing to do whatever to put a roof over our kids’ heads,” she said.

Dave is also studying accounting at Central Oregon Community College, so there are student loans to pay. He’s hoping it’s a recession-proof job.

As the mortgage payments pile up, the hardest part, Jaimie said, is not knowing if they will be able to stay in their house.

“We need to have a safe, comfortable place for our kids,” Jaimie said. “And that’s in jeopardy. If I didn’t have kids, it would be different.”

They are hoping the food stamps can alleviate some of the grocery bill costs so they can put more money toward paying off their house.

“I just kept thinking we could do this on our own,” Dave said.

But they couldn’t.

“We tried to put it off, but it caught up with us,” Jaimie said. “We couldn’t think about it anymore; we just had to do it. So here we are.”

(Kudos to The Bully for running this piece. Credit where it's due.)
Post over.

Then and Now

Usually on these weekly posts, I wax on about how awful it's going to get. But I read the following piece, and this week I figured I'd wax off.

Read this.

Great Depression in the United States
I. Introduction

Great Depression in the United States, worst and longest economic collapse in the history of the modern industrial world, lasting from the end of 1929 until the early 1940s. Beginning in the United States, the depression spread to most of the world’s industrial countries, which in the 20th century had become economically dependent on one another. The Great Depression saw rapid declines in the production and sale of goods and a sudden, severe rise in unemployment. Businesses and banks closed their doors, people lost their jobs, homes, and savings, and many depended on charity to survive. In 1933, at the worst point in the depression, more than 15 million Americans—one-quarter of the nation’s workforce—were unemployed.

The depression was caused by a number of serious weaknesses in the economy. Although the 1920s appeared on the surface to be a prosperous time, income was unevenly distributed. The wealthy made large profits, but more and more Americans spent more than they earned, and farmers faced low prices and heavy debt. The lingering effects of World War I (1914-1918) caused economic problems in many countries, as Europe struggled to pay war debts and reparations. These problems contributed to the crisis that began the Great Depression: the disastrous U.S. stock market crash of 1929, which ruined thousands of investors and destroyed confidence in the economy. Continuing throughout the 1930s, the depression ended in the United States only when massive spending for World War II began.

The depression produced lasting effects on the United States that are still apparent more than half a century after it ended. It led to the election of President Franklin Delano Roosevelt, who created the programs known as the New Deal to overcome the effects of the Great Depression. These programs expanded government intervention into new areas of social and economic concerns and created social-assistance measures on the national level. The Great Depression fundamentally changed the relationship between the government and the people, who came to expect and accept a larger federal role in their lives and the economy.

The programs of the New Deal also brought together a new, liberal political alliance in the United States. Roosevelt’s policies won the support of labor unions, blacks, people who received government relief, ethnic and religious minorities, intellectuals, and some farmers, forming a coalition that would be the backbone of the Democratic Party for decades to come.

On a personal level, the hardships suffered during the depression affected many Americans’ attitudes toward life, work, and their community. Many people who survived the depression wanted to protect themselves from ever again going hungry or lacking necessities. Some developed habits of frugality and careful saving for the rest of their lives, and many focused on accumulating material possessions to create a comfortable life, one far different from that which they experienced in the depression years.

The depression also played a major role in world events. In Germany, the economic collapse opened the way for dictator Adolf Hitler to come to power, which in turn led to World War II.

II. Causes of the Depression

It is a common misconception that the stock market crash of October 1929 was the cause of the Great Depression. The two events were closely related, but both were the results of deep problems in the modern economy that were building up through the “prosperity decade” of the 1920s.

As is typical of post-war periods, Americans in the Roaring Twenties turned inward, away from international issues and social concerns and toward greater individualism. The emphasis was on getting rich and enjoying new fads, new inventions, and new ideas. The traditional values of rural America were being challenged by the city-oriented Jazz Age, symbolized by what many considered the shocking behavior of young women who wore short skirts and makeup, smoked, and drank.

The self-centered attitudes of the 1920s seemed to fit nicely with the needs of the economy. Modern industry had the capacity to produce vast quantities of consumer goods, but this created a fundamental problem: Prosperity could continue only if demand was made to grow as rapidly as supply. Accordingly, people had to be persuaded to abandon such traditional values as saving, postponing pleasures and purchases, and buying only what they needed. “The key to economic prosperity,” a General Motors executive declared in 1929, “is the organized creation of dissatisfaction.” Advertising methods that had been developed to build support for World War I were used to persuade people to buy such relatively new products as automobiles and such completely new ones as radios and household appliances. The resulting mass consumption kept the economy going through most of the 1920s.

But there was an underlying economic problem. Income was distributed very unevenly, and the portion going to the wealthiest Americans grew larger as the decade proceeded. This was due largely to two factors: While businesses showed remarkable gains in productivity during the 1920s, workers got a relatively small share of the wealth this produced. At the same time, huge cuts were made in the top income-tax rates. Between 1923 and 1929, manufacturing output per person-hour increased by 32 percent, but workers’ wages grew by only 8 percent. Corporate profits shot up by 65 percent in the same period, and the government let the wealthy keep more of those profits. The Revenue Act of 1926 cut the taxes of those making $1 million or more by more than two-thirds.

As a result of these trends, in 1929 the top 0.1 percent of American families had a total income equal to that of the bottom 42 percent. This meant that many people who were willing to listen to the advertisers and purchase new products did not have enough money to do so. To get around this difficulty, the 1920s produced another innovation—“credit,” an attractive name for consumer debt. People were allowed to “buy now, pay later.” But this only put off the day when consumers accumulated so much debt that they could not keep buying up all the products coming off assembly lines. That day came in 1929.

American farmers—who represented one-quarter of the economy—were already in an economic depression during the 1920s, which made it difficult for them to take part in the consumer buying spree. Farmers had expanded their output during World War I, when demand for farm goods was high and production in Europe was cut sharply. But after the war, farmers found themselves competing in an over-supplied international market. Prices fell, and farmers were often unable to sell their products for a profit.

International problems also weakened the economy. After World War I the United States became the world’s chief creditor as European countries struggled to pay war debts and reparations. Many American bankers were not ready for this new role. They lent heavily and unwisely to borrowers in Europe, especially Germany, who would have difficulty repaying the loans, particularly if there was a serious economic downturn. These huge debts made the international banking structure extremely unstable by the late 1920s.

In addition, the United States maintained high tariffs on goods imported from other countries, at the same time that it was making foreign loans and trying to export products. This combination could not be sustained: If other nations could not sell their goods in the United States, they could not make enough money to buy American products or repay American loans. All major industrial countries pursued similar policies of trying to advance their own interests without regard to the international economic consequences.

The rising incomes of the wealthiest Americans fueled rapid growth in the stock market (see Stock Exchange), especially between 1927 and 1929. Soon the prices of stocks were rising far beyond the worth of the shares of the companies they represented. People were willing to pay inflated prices because they believed the stock prices would continue to rise and they could soon sell their stocks at a profit.

The widespread belief that anyone could get rich led many less affluent Americans into the market as well. Investors bought millions of shares of stock “on margin,” a risky practice similar to buying products on credit. They paid only a small part of the price and borrowed the rest, gambling that they could sell the stock at a high enough price to repay the loan and make a profit.

For a time this was true: In 1928 the price of stock in the Radio Corporation of America (RCA) multiplied by nearly five times. The Dow Jones industrial average industrial average—an index that tracks the stock prices of key industrial companies—doubled in value in less than two years. But the stock boom could not last. The great bull market of the late 1920